CEO Salaries Dropping but Bonuses Still Guaranteed: Report

Australian banknotes in Melbourne, on Nov. 7, 2017. Paul Crocker/AFP via Getty Images

This year’s annual survey of CEO remuneration by activist shareholder group, the Australian Council of Superannuation Investors (ACSI) shows that the salaries of leaders of the ASX200 companies have fallen.

However, bonus payments have become the norm, with only two bosses failing to take home a substantial payout.

The study tracks “realised pay”—the value of cash and equity that CEOs received—instead of “reported pay,” which ACSI says gives “a more accurate reflection of financial outcomes.”

On that measure, CEO incomes have fallen marginally. Among the top 100 companies, median CEO pay fell from $3.93 million (US$2.66 million) to $3.87 million (US$2.61 million), the lowest in the 10 years the ACSI study has collected realised pay data.

	FY23	FY22	FY18	FY14	One-year change	Five-year p.a. change	Nine-year p.a. change
Median	$3,868,346	$3,931,362	$4,502,000	$3,958,000	-1.6%	-3.0%	-0.3%
Average	$5,031,232	$5,266,905	$5,660,301	$5,610,057	-4.5%	-2.3%	-1.2%
Highest	$27,344,826	$44,337,989
Lowest	$1,042,895	$611,738

Second Tier ASX Salaries Also Dropped

In the second tier—the ASX 101-200—the median also fell from $2.10 million to $1.95 million, lower than any year before FY19.

However, reported pay has actually increased, with the median exceeding $5 million for the first time. The previous record was $4.73 million in FY17. ACSI warns that this is “normally a precursor for much higher realised pay outcomes in the future.”

“The numbers show that we could see a breakout in CEO pay levels in future,” said Ed John, executive manager of stewardship at ACSI.

“It will be critical that boards pay close attention and ensure performance hurdles are set at the right levels.”

Regardless of performance, the average CEO is not at risk of losing their bonus, which comes on top of the realised income and is a median of 66.3 percent of the potential maximum for ASX100 companies and 60.7 percent for those in the ASX 101-200.

Only two ASX100 and six ASX101-200 CEOs received no bonus for the 2023 year, prompting ACSI to observe that “once again, a CEO has more chance of being terminated than missing out on a bonus.”

Bonuses should be linked to outcomes, ACSI says

“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,” Mr. John said.

Over the nine years the study has collected data on bonuses, the median has been at least 60 percent of the maximum every year for ASX100 CEOs (other than during COVID-affected FY20).

In FY23, 70 of the 75 ASX100 CEOs were eligible for an annual bonus, and only two—Domino’s Pizza Enterprises’ Don Meij and Medibank’s David Koczkar—received zero.

However, the boss of Carsales, Cameron McIntyre, was awarded 100 percent.

In dollar terms, Macquarie Group CEO Shemara Wikramanayake received the most, $32 million in bonuses. That was the highest award in the 13 years that this data has been collected and only the second time that the maximum award has been above $20 million.

The first time that barrier was breached was also by Ms. Wikramanayake, who received $25 million in FY22.

Greg Goodman of Goodman Group remains the highest-paid boss based in Australia, with a realised pay of $27.34 million.

Macquarie’s Ms. Wikramanayake was again second, with a realised pay of $25.32 million. However, they are eclipsed by the offshore-based CEOs of ASX 100 companies; Resmed’s Mick Farrell was compensated $47.58 million last year, followed by News Corp’s Robert Thomson on $41.53 million.

The top 10 ASX 100 Australia-based CEOs, ranked by realised pay, were:

CEO	Company	Realised pay	FY22 rank	Reported pay
Greg Goodman	Goodman Group	$27,334,826	1	$14,163,551
Shemara Wikramanayake	Macquarie Group	$25,321,493	2	$30,404,240
Mike Henry	BHP Group	$19,678,778	4	$11,162,444
Matt Comyn	Commonwealth Bank	$10,523,256	13	$7,341,873
Jakob Stausholm	Rio Tinto	$10,465,131	23	$9,142,083
Rob Scott	Wesfarmers	$9,566,506	8	$8,175,399
Colin Goldschmidt	Sonic Healthcare	$8,350,810	7	$5,968,507
Brad Banducci	Woolworths	$7,888,649	6	$7,711,495
Trevor Croker	Aristocrat Leisure	$7,598,273	12	$9,157,963
Graham Chipchase	Brambles	$7,199,452	14	$8,196,829

Seventeen termination payments were made to ASX 100 CEOs in the 2023 financial year, costing shareholders an aggregate $33.52 million—the highest in more than a decade.

Because the number of terminations was also the highest since ACSI began collecting this data in 2008, the average termination payment per CEO of $1.97 million was less than the FY22 average of $2.43 million and the lowest since FY19.

The highest was for CSL’s former CEO Paul Perreault, who received US$5.06 million in cash, including 18 months’ salary. The second most expensive was $4.22 million, paid to the estate of former IGO CEO Peter Bradford following his death in October 2022.

“The impact of investor scrutiny of CEO contractual arrangements, and changes to the Corporations Act in 2009 limiting termination payments without shareholder approval to 12 months’ fixed pay, are ... apparent,” the report says.