Basic pay for chief executives at Australia’s top 100 companies is at its lowest in almost a decade.
The average fixed pay is down 3.3% to $1.86 million on the previous year as boards hire new CEOs on lower pay packets.
The analysis by the Australian Council of Superannuation Investors shows the fall was larger across the ASX 200 companies with CEOs taking home an average $1.51 million, a fall of 4.6%.
But bonuses, in short and long term incentives including share allocations, helped to make up for the shrinking basic pay at least for some of the CEOs.
Most (93%) of ASX 100 CEOs were awarded a bonus, more than at any time since 2008. The median bonus was 76% of maximum.
Basic Pay has been declining since the GFC in 2009 when CEOs at ASX 100 companies were getting an average $2.09 million a year.
Looking at realised pay, adds in the value of shares vesting during the financial year rather than the theoretical accounting value included in remuneration reports, median realised pay across the ASX 100 was down 2% to $3.88 million.
Louise Davidson, CEO of the Australian Council of Superannuation Investors (ACSI), says the results of the 15th annual study suggest that scrutiny has had a measurable impact.
“The fact that boards are appointing new CEOs on less money shows the monitoring and engagement by asset owners and institutional investors has had a positive outcome on executive pay, forcing real declines over time,” she says.
“Independent company directors should be acutely aware that the community believes CEO pay is out of step, representing as it does many multiples of ordinary people’s wages, and that boards risk an investor backlash if they do not keep a tight leash on management rewards.”
Davidson says such a high proportion of CEOs receiving three quarters of their bonuses raises questions about the appropriateness of bonus hurdles.
“This begs the question — are bonuses really just fixed pay dressed up as at-risk pay?” she says.
Bonuses were more variable across the ASX 101-200, where the median bonus was 56% of maximum. A third of the 70 CEOs in the ASX 101-200 sample did not get a bonus.
Against colleagues in the US and the UK, Australian ASX 100 CEOs are falling behind, as this chart shows: