This report is ACSI’s 16th annual survey of CEO pay in Australia’s largest listed companies.
Key findings:
This year’s survey includes data about 83 ASX100 CEOs and 77 CEOS from the ASX101-200.
Bonuses are hard to miss
- Almost one third of ASX100 CEOs (25 of 83) received bonuses equal to 80%, or more, of their potential maximum payout, while only 18 CEOs received less than 50% of their maximum. Those outcomes continue to suggest that executive bonuses in large companies are better described as “variable fixed pay”, rather than genuinely at-risk performance pay.
- Bonus persistence remained a feature in FY16 for ASX100 CEOs. Even though the number of CEOs who received no bonus for performance reasons doubled from four to eight, the median bonus was paid at just under 70% of the potential maximum (down from 76% in FY15). The median bonus award for an ASX100 CEO in FY16 was around $100,000, or 7.5%, lower at $1.49m. The average rose marginally, from $1.95m to $2.06m, due to a handful of very large bonuses.
- Among ASX101-200 CEOs, the median bonus payment (as a proportion of maximum) rose from 56% in FY15 to 74.5%. This was largely due to new entrants in the survey. The median bonus accrued for an ASX101-200 CEO rose almost 30% to $486,000, although the average declined slightly. More than 15% of ASX101-200 CEOs received no bonus after failing to meet performance hurdles.
Fixed pay still below long-term peaks
- Median and average ASX100 CEO fixed pay remains well below prior-year peaks (median fixed pay peaked in FY12 at $1.95m and the average topped out at $2.02m in 2009), even though it rose modestly in 2016 – with the median up 4.4% to $1.79m, and the average 1.4% higher at $1.89m.
- In the ASX101-200, median and average fixed pay fell for the second consecutive year, with the median declining 2.2% to $864,000 and the average 3.7% lower at $1.04m. Average and median fixed pay were at their lowest levels since FY12 and FY11 respectively.
Equity awards paying dividends
- Average realised pay (cash payments plus the value of vested equity) was again significantly higher than average reported pay. Average realised pay for ASX100 CEOs was $5.70m (FY15: $5.54m). Average reported pay was $5.16m (FY15: $4.99m).
- Among ASX101-200 CEOs, average realised pay was $2.02m (FY15: $1.89m), which is still appreciably higher than the average reported pay total of $1.78m (the same figure as FY15).
- Four ASX100 CEOs earned more than $20m in 2016 on a realised-pay basis (Table 1), with Macquarie Group’s Nicholas Moore, Domino’s Pizza Enterprises’ Don Meij and James Hardie Industries’ Louis Gries joining Westfield Corporation’s CEOs, the Lowy brothers Peter and Steven, in this category. Meij’s ranking on the back of a soaring Domino’s share price was especially remarkable, given his $4m salary ranked him at only 44, based on reported pay.
- Two CEOs in the ASX101-200 achieved realised pay above $10m – Premier Investments’ Mark McInnes on $11.09m and BT Investment Management’s Emilio Gonzalez with $10.45m.
Termination costs continue to fall
- The aggregate cost of termination payments across the ASX200 fell from $38.42m to $23.98m, the lowest outcome since FY13. This included termination payments to 17 CEOs. Eight ASX100 CEOs and two ASX101-200 CEOs each received more than $1m. The largest termination payments in FY16 were received by former Rio Tinto CEO Sam Walsh ($4.38m, including previously undisclosed leave entitlements), Iluka’s David Robb ($3.88m) and former Charter Hall co-CEO David Southon ($2.89m), whose position was made redundant during FY16.
