Chief executives in Australia’s largest companies are making slightly less money but are still taking home on average 50 times the pay package of a typical worker.
In its annual audit of CEO pay, the Australian Council of Superannuation Investors found chief executives at the 100 largest listed businesses averaged $5m in the 2023 financial year, down from $5.2m the previous year.
The drop is consistent with a steady decline from Australian CEO salary highs in 2021, according to the country’s biggest governance adviser, when top dog wages boomed after taking a pandemic-induced hit.
Louise Davidson, Acsi’s chief executive, said the fact CEOs were making less was “encouraging”.
“The results of this year’s research indicate that the efforts of investors, and greater scrutiny from Australian boards, have seen CEO pay levels hold or decrease in many of Australia’s largest listed companies.”
Bonuses, however, have “become the norm”, one of the “clear issues” highlighted in the research, Davidson said.
Just eight CEOs in Acsi’s sample – two from ASX100 companies (Domino’s and Medibank) and six from ASX101-200 businesses – received no bonus at all. There were 24 termination payments across the full ASX200 sample.
“This year’s study has again found that a CEO is more likely to lose their job than their bonus, with ASX100 CEOs receiving a median bonus of 66.3% of their maximum potential,” Davidson said.
Ed John, executive manager of stewardship at ACSI, said “bonuses should not become a given in Australian companies”.
“At a time when companies are focused on productivity and performance, it is critical that bonuses are only paid for exceptional outcomes,” John said.
“While overall pay levels have dropped, investors and boards must not become complacent. The numbers show that we could see a breakout in CEO pay levels in future. It will be critical that boards pay close attention and ensure performance hurdles are set at the right levels.”
Acsi, which represents local and overseas funds with more than $1tn under management, advises members on how to vote at shareholder meetings, which includes remuneration reports.
If shareholders vote down a company’s executive remuneration package two years in a row, the board may be voted out.
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Macquarie Group’s Shemara Wikramanayake again topped the reported earnings table, the first woman to do so for three successive years. She earned $30.4m in 2023, $23.7m in 2022 and $16m in 2021.
Macquarie uses a profit share arrangement that richly rewards executives when the company performs well. While Wikramanayake is the highest-paid listed company chief executive in the country, other Macquarie executives have earned even higher pay packets than their boss after their divisions generated strong returns.
Alan Joyce, the former Qantas boss who was forced to bring forward his retirement after a string of legal scandals and customer fury against the airline, was the third-highest paid CEO on reported pay, taking in $11.9m in 2023. At the Qantas annual general meeting in November, 83% of votes were cast against the remuneration plans, marking one of the biggest rejections on record for any Australian company.
The report, conducted with research from the governance group Ownership Matters, noted that Greg Goodman, the chief executive and co-founder of the logistics real estate giant Goodman Group, was the highest-paid Australia-based chief executive when using a metric called “realised pay”, which includes company equity that may have been claimed.
On this metric, Goodman earned $27.3m in 2023, down from his $44.3m in realised pay in 2022.
Despite what she described as an encouraging drop-off in average salaries and the warning around bonuses, Davidson said the research “highlights some clear warning signs for Australian boards and investors”.
“Reported pay levels for ASX 200 CEOs edged up in the year, and that is normally a precursor for much higher realised pay outcomes in the future,” Davidson said.
Additional reporting by Jonathan Barrett
