Question: Former Qantas CEO Alan Joyce's final pay has been reduced by $500,000 to $21.4 million as the board investigates alleged consumer law breaches before deciding on further clawbacks

Context/Scenario

Former Qantas CEO Alan Joyce's final pay has been reduced by $500,000 to $21.4 million as the board investigates alleged consumer law breaches before deciding on further clawbacks. The airline's annual report (fiscal year ending June 30, 2023, authorised for issue by board of directors on September 20, 2023) also revealed a delay in paying $2.2 million in bonuses to Joyce due to recent challenges faced by the company. Joyce may receive less if the board responds to pressure from shareholders and decides to claw back an additional $8.3 million in bonuses.

In addition to the fallout from the payout to former CEO Alan Joyce, other challenges that Qantas face include the ACCC's legal action over ghost flights, and a High Court ruling over illegally sacked workers.¹

Qantas is now navigating a complex landscape of legal challenges, shareholder discontent, concerns over its corporate governance and customer complaints over cancelled flights, and lost baggage, and the need to restore its reputation while grappling with executive compensation concerns. The outcome of these challenges will shape the airline's future corporate governance practices and its relationship with shareholders and the public.

Read the following news article for more details and better understanding of the context.

https://www.abc.net.au/news/2023-09-26/qantas-shareholders-richard-goyder-resignation-board-on- notice/102901330

Specific Requirements

Assume you have been contacted by the board of directors of Qantas to advise on several matters. The board of directors has asked you to write a business report which responds to the following:

1. On September 14, 2023, the media reported that Qantas is set to compensate approximately 1,700 workers after the High Court ruled that their pandemic-related sackings were illegal. With reference to specific relevant paragraphs in AASB 110 (“Events after the Balance Sheet Date”), explain how and why the High Court ruling and related compensation was recognized and/or disclosed in Qantas’ annual report for the period ending June 30, 2023.                                     (Suggested words: 350)

2. In the context of agency theory, evaluate whether Qantas's decision to outsource ground staff, aligned with the interests of its shareholders. in your response, explicitly define, explain, and apply agency theory                                    (Suggested words: 350)

3. Recommend mechanisms that Qantas can be put in place to ensure better alignment of the company's strategic decisions with shareholder interests. You must include detailed justification for the recommendations you provide, and any disadvantages associated with your recommendations. In your response, use examples of two strategic decisions that Qantas may consider based on recent media articles.

(Suggested words: 400)

4. In the context of the managerial branch of stakeholder theory and relying on the expected users of the general purpose financial statements, identify two stakeholders (other than shareholders and potential investors) and explicitly discuss actions management can undertake to better balance their interests alongside those of stakeholders in its efforts to rebuild trust and reputation. In your response, ensure you explicitly define, explain, and apply the managerial branch of stakeholder theory.

(Suggested words: 500)