Pay growth for the heads of Australia’s biggest ASX-listed companies has stalled, according to the annual survey of CEO pay by the Australian Council of Superannuation Investors.
Average fixed pay for ASX100 CEOs is the same as it was nine years ago, as investor pressure prompts restraint by the boards of Australia’s largest companies.
The median realised pay, including equity awards and bonuses, for ASX100 CEOs was $3.78 million in 2016 compared to $3.88 million in 2015 and $3.96 million in 2014.
“It’s refreshing to note that since the introduction of the ‘two strikes’ rule, and an increase in shareholder scrutiny, CEO pay has largely been held in check by Australian boards,” says council CEO Louise Davidson.
The Commonwealth Bank is among companies facing the prospect of a second strike at the next AGM. Two votes against a company’s remuneration report means a spill of all board director positions.
Here are the 10 biggest pay packets of the CEOs of the 200 top ASX companies:
Qantas CEO Alan Joyce is a new entrant on the list, thanks to his turnaround of Australia’s national airline.
His inclusion reflects a strong share-price performance, which resulted in the first substantial vesting under Qantas’s long-term incentive scheme in many years.
Joyce received 2.19 million shares in August 2015 and the share price trebled over the vesting period.
Qantas shareholders and staff also benefited from the turnaround in dividends and in bonuses.
This year’s annual survey by the Australian Council of Superannuation Investors showed 86% of ASX100 CEO’s received a bonus in 2016.
And when a bonus was paid, the median was 69% of the maximum payout. Only 18 CEOs in the ASX100 received less than half of their maximum potential.
The Australian Council of Superannuation Investors says the persistence of bonus payments remains a concern for investors.
Davidson says investors reasonably assume that bonuses will only be awarded for exceptional performance.
“The prevalence of CEO bonuses at consistently high levels raises serious questions about the way performance hurdles are being designed and applied,” she says.
“The fact that only 18 CEOs received bonuses below 50% of maximum indicates that they bear little relation to performance in many companies.”
Davidson says companies need to explain more of the why of their remuneration decisions to their investors.
The members of the Australian Council of Superannuation Investors collectively manage more than $1.6 trillion in assets and own on average 10% of every ASX200 company.