Financial and Insurance industry takes a Royal Commission hit in Australian Board Remuneration Survey 2019
The Governance Institute, in partnership with McGuirk Consultants, have released the results of its seventh annual Australian Board Remuneration Survey report. While remuneration is up for board chairs and directors across the board, it is down for Financial and Insurance sector organisations.
Overall, across all industries and organisation types, chairs and directors saw average remuneration grow by 3% and 4% respectively. However, ASX200 respondents saw a 7% and 1% decline on average remuneration for chairs and directors.
When analysing by industry, Financial and Insurance respondents stood out, with 11% drops for both their chairs and their directors (after 11% increases the year prior). The drop was similar for Financial and Insurance Industry executives, as Managing Directors and CEOs saw their pay packets drop by 10% and 21% respectively. This is after all these roles, except CEO, saw large increases in 2017-2018.
“It is clear that the effects of the Banking Royal Commission are already being felt by Australia’s financial institutions, as shareholders and their boards move to act upon Commissioner Hayne’s recommendations,” said Megan Motto, CEO, Governance Institute of Australia.
“The Commission exposed multiple examples of poor corporate culture, poor ethics and risk management, leading to a number of board and executive resignations. Beyond that, there has been serious brand damage, hefty fines for poor conduct and, in some cases, criminal proceedings where the behaviour has been outright illegal. The customer was not put at the centre of the experience, and their organisations are paying the bill. That bill is of course then flowing down to board and executive remuneration,” she said.
“This data also reflects the Governance Institute’s Risk Management Survey released last week, which showed that the financial services industry is extremely concerned about the regulatory effects, brand damage, and liability effects coming out of the Banking Royal Commission. The leaders and boards of these organisations are seeing this reflected in their remuneration packages.”
One third of all the Boards across the survey increased their board remuneration last year. 32% of ASX boards saw an increase (up from 30% in 2018), 40% of unlisted businesses, 28% of not-for-profit boards and 28% of private company boards.
The average annual package for company secretaries at Financial and Insurance companies was $205,393 (a 24% increase), but it dropped amongst organisations overall (down 7% to $165,263).
The 2019 Australian Board Remunerations Survey is based on remuneration data covering 1,545 boards, and is current to the year ending 30 June 2019. The Governance Institute and McGuirk Management Consultants collected data from 779 online contributors, 377 boards who are ongoing contributors to the survey, and a further 390 client boards of MMC.
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Governance Institute of Australia
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About Governance Institute of Australia
With a membership of over 7,500 chartered secretaries, governance leaders and risk managers from some of Australia’s largest organisations, Governance Institute of Australia is the only fully independent professional association with a sole focus on governance excellence. For 100 years, our education, research, advocacy, and support networks have provided cutting edge governance and risk management advice to Australian business leaders from all walks of life. We celebrate Australia’s successes, and challenge it to be even better. www.governanceinstitute.com.au