Even if heads roll at Optus, we may not know much about their executive payouts

Optus has promised its staff will be held accountable for September’s Triple Zero outage – but only after “the dust settles” on current investigations. Three deaths have been linked to the outage.

On Monday, the first day of hearings for a Senate inquiry into the incident, inquiry chair and Greens Senator Sarah Hanson-Young bluntly asked “who’s going to get the sack?” from inside Optus’ executive team.

Optus chairman John Arthur replied:

If you’re asking me whether or not there will be accountabilities here, and accountabilities not just for junior people, then I can assure you that there will be, when the dust settles.

Yet even if that happens, how much will Australians know about any future exit payouts for Optus executives? Probably less than Optus customers would like, thanks to it being a foreign-owned company.

When major corporate failures occur, Australians expect meaningful accountability – including on executive pay.

Why leaving a company can be worth more than staying

Modern executive pay extends far beyond salaries. Think of it as a financial layer cake. Base salary is often just the bottom layer.

On top of this can sit performance bonuses, stock options worth millions, and restricted shares that “vest” over time. Vesting means the shares have completed a required waiting period and now fully belong to the employee.

There are also retention bonuses, designed to keep executives during uncertain periods, and severance agreements that can shield executives from the financial fallout of poor performance.

When an executive’s departure is described as “mutual”, rather than being fired “for cause”, they typically keep the rights to exercise stock options they have earned and claim severance payments.

They may even get accelerated access to restricted shares that hadn’t yet “vested”. This is the icing on the cake.

In some cases, leaving the company can be more financially rewarding than staying.

Leaders respond to incentives

Research shows executives who hold valuable stock and options can become reluctant to make decisions that might threaten that wealth, even when those decisions would benefit shareholders.

Yet, when failures occur, these holdings often survive their departure completely intact.

Research examining executive compensation has found the sensitivity of stock options to price changes can encourage executives to pursue strategies that increase volatility, regardless of long-term benefit to shareholders or the public.

Consider what happened at Qantas after the COVID pandemic. While the airline illegally dismissed ground workers and sold tickets on thousands of already-cancelled “ghost flights”, chief executive Alan Joyce departed with a substantial payout.

Despite widespread public outcry and major regulatory penalties, his compensation remained largely protected by contracts negotiated before the crisis.

Without visibility into compensation structures, we cannot determine whether pay arrangements appropriately align executive incentives with public safety – or whether compensation design itself contributed to corporate failures.

Why Optus is even more opaque

Despite being one of Australia’s largest telecommunications providers, delivering essential services to millions, the public has limited visibility into how Optus’ executives are compensated.

Optus, while wholly owned by Singapore’s publicly listed Singtel, operates as a private subsidiary in Australia.

This means it faces less stringent local disclosure requirements than a company listed on the Australian Securities Exchange (ASX), such as Telstra.

For listed Australian companies, executive departures and remuneration details must be disclosed in their annual reporting, in the directors’ remuneration report. However, this may occur with a significant time lag.

As a proprietary company, Optus has no such duty.

While parent company Singtel reports to the Singapore Exchange, these disclosures rarely detail individual Australian executive payments.

This means Australians would likely never know the full financial details of any executive exit packages following the Triple Zero outage, despite the direct impact on public safety.