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Large pay rises for C-suite executives reveal impacts of inflation and labour market pressures

Senior executives at some of Australia’s largest listed companies have recorded average pay rises more than double the rate of inflation over the past year according to a new report.

The latest annual Board & Executive Remuneration Report released by Governance Institute of Australia has found that base salaries of Managing Directors across ASX-listed companies rose an average of 14%, while CEO salaries rose an average of 15%.

Managing Directors of ASX 200 companies surveyed recorded an average fixed pay increase of 19%*.

The report produced by McGuirk Management Consultants in collaboration with the Governance Institute surveyed 1167 boards from across the public, private and not-for-profit sectors, including 226 listed companies. It also draws on publicly available data.

Governance Institute CEO Megan Motto said it’s an indication that a tight labour market and the rising cost of living is playing out at the executive level.

‘These are significant increases off the back of several years of relatively small rises in fixed pay for executives,’ Ms Motto said.

‘With AGM season looming, boards will need to have a strong narrative around their remuneration policies to stand up to shareholder scrutiny and manage reputation risks.’

Other key findings from survey respondents include:

  • 42% of ASX listed board directors and 71% of ASX listed senior executives received a pay rise in the last 12 months.
  • While 9% of ASX listed C-suite executives received an average increase to their fixed remuneration of more than 10%, only 3% of general staff received the same average pay rise.
  • The average fixed remuneration of an ASX 200 Managing Director is $1.58m.
  • 52% of listed company MDs were eligible for a performance bonus, with the average maximum bonus being 89%.
  • 51% of listed CEOs were eligible to receive a performance bonus, with the average maximum bonus being 72%.

Fixed pay rises of more than 10% for the roles of Company Secretary, Chief Digital Officer, General Counsel and Chief People and Culture officer in ASX-listed companies points to organisations focusing on recruitment in a changing regulatory environment, shifting work/organisation practices, cybersecurity and digital transformation.

‘Remuneration is a key factor for candidates, and with roles like Company Secretary now on the skills shortage list, it’s not surprising we’re seeing some really big jumps in base salaries for these positions,’ Ms Motto said.

The report found ASX listed board remuneration was largely based on consultant benchmarking and industry surveys, while the Consumer Price Index was the main criteria in determining board remuneration for unlisted and not-for-profit organisations.

For further information, head to the Remuneration Reports webpage.

*Raw data not included in final report.

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