Executives continue to receive double-digit pay rises despite lower inflation

Wednesday, 12 June 2024

Some of Australia’s largest listed companies have rewarded their senior executives with significant increases in base pay as well as bonuses over the past year according to a new survey.  

The latest annual Board & Executive Remuneration Report released by Governance Institute of Australia, McGuirk Remuneration and Directors Australia has found that fixed salaries of Managing Directors across ASX listed companies rose an average of 11 per cent, while CEO salaries rose an average of 14 per cent.  

The median figures are 11 per cent for CEOs and 5 per cent for Managing Directors.  

The survey of 1089 boards from across the public, private and not-for-profit sectors also showed general staff in listed companies by comparison received average increases in fixed pay of around 5 per cent.  

Around half of the managing directors and chief executive officers from all listed companies were eligible for performance bonuses. The average maximum bonus for MDs was 89 per cent while CEOs recorded a maximum 93 per cent bonus on average. 

Governance Institute CEO Megan Motto said senior leaders of publicly listed companies are likely being remunerated for successes as the ASX reaches all-time highs. 

“Executives are clearly being compensated for delivering profits and returns for shareholders and are making the most of a competitive market for top talent.” Ms Motto said. 

“But we have also seen increased shareholder and investor scrutiny of executive pay in the past 12 months which is likely to continue if companies aren’t able to justify such substantial remuneration increases.” 

The rise in average pay for top executives comes despite inflation falling from highs of around 7 per cent to 3.6 per cent in the past 12 months. The Fair Work Commission recently increased the minimum wage by 3.75 per cent.  

Other key findings from survey respondents include:  

• The average fixed remuneration of an ASX 200 Managing Director is $1.88m, up from $1.58m last year. 

• The average fixed remuneration of an ASX 200 CEO is $1.37m, up from $1.14m last year. 

• Around half of all board directors recorded increases in their remuneration with those in the listed and private sector receiving averages of between 8 and 9 per cent. 

• Consultant benchmarking was the key criterion for fixed remuneration increases for executives of listed companies 

• Organisational performance was the main metric for base pay rises for unlisted and private companies, while CPI was the main contributor to increases in the NFP sector. 

“Against the backdrop of the cost-of-living crisis and with so many doing it tough, it might be hard for some to stomach these figures on an individual basis,” Ms Motto said.  

“But it’s crucial to consider these results in the context that the top 200 listed companies range in size from $380m to over $100bn, providing jobs for millions of Australians and contributing to strong superannuation returns.” 

“It will be up to those investors and shareholders to make their voices heard if they feel there are reputational risks in not meeting community expectations.” 

For further information, head to the Governance Institute website. 

For interview requests, please contact: 

Antonette Collins, Senior Manager, Media and Communications 0477 949 604 

Media Inquiries:  media@governanceinstitute.com.au  

About the Governance Institute 

A national membership association, Governance Institute of Australia advocates for a community of governance and risk management professionals, equipping over 8,000 members with the tools to drive better governance within their organisation.