The latest survey by the Australian Council of Superannuation Investors (ACSI) reveals that CEO pay in Australia is currently at its lowest level in a decade. While salaries of leaders of ASX200 companies have decreased, bonus payouts remain high. The highest-paid CEO in Australia earned over $27 million last year.
The study focuses on “realised pay,” which includes cash and equity that CEOs actually receive, providing a more accurate reflection of financial outcomes than reported pay. The median CEO pay among the top 100 companies dropped to $3.87 million, the lowest in the 10 years of the ACSI study.
In the second tier of companies (ASX 101-200), the median CEO pay also decreased to $1.95 million, the lowest it has been in years. However, reported pay has increased, with the median exceeding $5 million for the first time, indicating a potential increase in CEO pay levels in the future.
ACSI warns that boards should set performance hurdles at the right levels to ensure that bonuses are only paid for exceptional outcomes. Despite performance, the average CEO is unlikely to lose their bonus, which is a significant percentage of their potential maximum income.
Bonuses should be linked to outcomes, according to ACSI, and should not be guaranteed in Australian companies. Over the years, the median bonus for ASX100 CEOs has consistently been at least 60 percent of the maximum. In FY23, most ASX100 CEOs were eligible for bonuses, with only two CEOs receiving zero bonuses.
In terms of dollar amounts, Macquarie Group CEO Shemara Wikramanayake received the highest bonus of $32 million, the highest in the 13 years of data collection. Greg Goodman of Goodman Group remains the highest-paid CEO based in Australia, with a realised pay of $27.34 million. However, the Australia-based CEOs of ASX 100 companies are overshadowed by their offshore-based counterparts. Resmed’s Mick Farrell received a compensation of $47.58 million last year, followed by News Corp’s Robert Thomson with $41.53 million.
The top 10 ASX 100 Australia-based CEOs, ranked by realised pay, were as follows:
1. Greg Goodman from Goodman Group – Realised pay: $27,334,826
2. Shemara Wikramanayake from Macquarie Group – Realised pay: $25,321,493
3. Mike Henry from BHP Group – Realised pay: $19,678,778
4. Matt Comyn from Commonwealth Bank – Realised pay: $10,523,256
5. Jakob Stausholm from Rio Tinto – Realised pay: $10,465,131
6. Rob Scott from Wesfarmers – Realised pay: $9,566,506
7. Colin Goldschmidt from Sonic Healthcare – Realised pay: $8,350,810
8. Brad Banducci from Woolworths – Realised pay: $7,888,649
9. Trevor Croker from Aristocrat Leisure – Realised pay: $7,598,273
10. Graham Chipchase from Brambles – Realised pay: $7,199,452
In the 2023 financial year, seventeen termination payments were made to ASX 100 CEOs, costing shareholders a total of $33.52 million – the highest amount in over a decade. This increase in terminations was also the highest since data collection began in 2008. The average termination payment per CEO was $1.97 million, lower than the FY22 average of $2.43 million and the lowest since FY19.
The highest termination payment was made to CSL’s former CEO Paul Perreault, who received US$5.06 million in cash, including 18 months’ salary. The second highest payment of $4.22 million was paid to the estate of former IGO CEO Peter Bradford following his passing in October 2022.
The report notes that the impact of investor scrutiny of CEO contractual arrangements, along with changes to the Corporations Act in 2009 limiting termination payments without shareholder approval to 12 months’ fixed pay, is evident.
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