Bosses of Australia's largest companies enjoyed pay rises almost three times the rate of inflation and equivalent to more than twice the average wage in the past year.
Bosses of Australia's largest companies enjoyed pay rises almost three times the rate of inflation and equivalent to more than twice the average wage in the past year.
A Saturday Age analysis of company reports filed in recent months by most of the country's 100 largest ASX-listed companies shows that the median increase in base pay for chief executives for their latest financial year was about 9 per cent - up from $1.47 million to $1.61 million.
Add in the chief executives' short-term cash bonuses and the cash-in-pocket rises to $2.61 million, up 5 per cent. In dollar terms, that means they picked up cash gains of about $130,000 a year.
The Australian Bureau of Statistics' most recent figure for the annual average wage is about $53,000. It estimates that wages have risen by 4.7 per cent for males and 4.1 per cent for females over the past year.
Australia's consumer price index at June 30 rose by 3.6 per cent, with the impact of higher fruit and petrol prices. The Reserve Bank this week estimated that inflation was now running closer to its preferred range of 2 to 3 per cent, excluding any impact of carbon tax proposals.
Among the ASX 100, the top five best-paid chief executives last financial year were Westfield's Frank Lowy ($15.96 million), Rio Tinto's Tom Albanese ($12.75 million), ANZ's Mike Smith ($10.86 million), BHP's Marius Kloppers ($10.84 million) and Westpac's Gail Kelly ($9.59 million).
Executive and board remuneration will soon come under further scrutiny from shareholders, whose investments have been hit by collapsing markets, as this year's annual meeting season begins.
''Shareholders will say: 'We know it's tough, we understand it's tough, but should we be the only ones who hurt? You still get bonuses ?whereas I only get my bonus when the sharemarket is performing well','' warned Ann Byrne, chief executive of the Australian Council of Superannuation Investors, the group that represents industry super funds.
Total remuneration of executives, which includes the estimated value of share packages that may take several years to earn, showed a median decrease of 1.3 per cent, from $3.57 million to $3.52 million in the latest financial year.
That decline most likely reflects falling share prices affecting the value of their packages, and tougher trading conditions that meant executives failed to clear all of the hurdles needed to achieve maximum pay.
The Age analysis differs from an annual chief executive pay report compiled by Ms Byrne's ACSI, and released last month. The ACSI's report, based on the payments to executives of the top 100 companies in 2010, said that median fixed pay of executives rose only slightly from $1.81 million to $1.82 million. The ACSI's fixed remuneration measure includes superannuation, long service leave and miscellaneous short-term perks as well as base pay.
The ACSI also singled out the five best-paid and five lowest-paid chief executives to analyse whether their pay reflected their companies' performances. Mr Lowy's $14.3 million in fixed pay and bonus and the $11.2 million earned by former Leighton Holdings chief Wal King were criticised by the ACSI for being insulated from the effects of performance.
Frequently Asked Questions about this Article…
How much did CEO base pay rise at Australia’s largest ASX 100 companies?
An analysis of recent company reports found the median increase in base pay for ASX 100 chief executives was about 9%, rising from $1.47 million to $1.61 million in the latest financial year.
What was the typical cash-in-pocket for ASX 100 CEOs after bonuses?
Including short-term cash bonuses, the median cash-in-pocket for ASX 100 chief executives was around $2.61 million, a rise of about 5% — roughly $130,000 more in cash compared with the prior year.
How does CEO pay compare with the average Australian wage and inflation?
CEO cash pay is far higher than the average Australian wage: the Australian Bureau of Statistics’ most recent average wage cited in the article is about $53,000. At the same time, consumer prices rose 3.6% to June 30, while annual wage rises were estimated at about 4.7% for males and 4.1% for females. The Reserve Bank estimated underlying inflation closer to its 2–3% target range (excluding certain policy impacts).
Which chief executives were the highest paid among the ASX 100?
The five best-paid CEOs reported were Westfield’s Frank Lowy ($15.96 million), Rio Tinto’s Tom Albanese ($12.75 million), ANZ’s Mike Smith ($10.86 million), BHP’s Marius Kloppers ($10.84 million) and Westpac’s Gail Kelly ($9.59 million).
Why did total executive remuneration show a median decline even though base pay rose?
Median total remuneration — which includes the estimated value of long‑term share packages — fell by about 1.3% from $3.57 million to $3.52 million. The article attributes this decline mainly to falling share prices reducing the estimated value of equity packages and to tougher trading conditions that meant executives did not meet all performance hurdles for maximum pay.
Should everyday investors expect more scrutiny of executive pay at company annual meetings?
Yes. The piece notes that executive and board remuneration was set to face increased scrutiny from shareholders as the annual meeting season began, with investor groups and members raising concerns about executives still receiving bonuses while investment returns were under pressure.
What did the ACSI (Australian Council of Superannuation Investors) report say about executive fixed pay?
ACSI’s report found median fixed pay rose only slightly — from $1.81 million to $1.82 million — when fixed remuneration is measured to include superannuation, long service leave and other short‑term perks. ACSI also examined whether pay reflected company performance and criticised some large fixed payments, saying portions of pay appeared insulated from performance outcomes.
How do short‑term bonuses and long‑term share packages affect reported CEO pay figures?
Reported CEO pay typically separates base pay, short‑term cash bonuses and long‑term equity packages. Short‑term bonuses raise the immediate cash-in-pocket (the article shows a median cash figure of $2.61 million), while long‑term share packages are estimated values that can take years to vest and are sensitive to share price movements — which is why total remuneration figures can fall even when base pay rises.
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