Now in its 20th year, the research analyses data published by companies for the 2020 financial year, and is the first to reflect the impacts of the COVID-19 pandemic on company performance and remuneration outcomes.
Australia’s largest companies have mostly shown discipline and restraint in unprecedented circumstances. The research finds that pay outcomes for CEOs at Australia’s leading companies fell to their lowest levels in more than a decade in the 2020 financial year, and almost one third of ASX100 CEO’s received no bonus in the past financial year.
Key findings:
COVID locks down ASX100 pay
The COVID-19 pandemic had a major impact on pay for ASX100 CEOs:
- Almost a third of ASX100 CEOs (31%) received zero bonus for performance reasons in FY20, more than double FY19 outcomes.
- For CEOs who did receive a bonus, outcomes were at the lowest levels in the past 6 years. The median bonus outcome (as a proportion of maximum) almost halved to 31% from 60% in FY19.
- The median bonus awarded for an ASX100 CEO dropped 31% to $1.14mn – the lowest in ACSI’s 10 years of data.
- Bonus outcomes for CEOs in smaller entities in the ASX101-200 also fell, but less dramatically, from 60% to 50% of maximum potential.
ASX100 CEO overall pay fell to levels not seen for more than a decade:
- Median realised pay for ASX100 CEOs fell 3.6% to $3.99mn. For ex-100 CEOs it dropped 22% to below $1.70mn.
- Median reported pay (total pay according to Australian regulations) fell 18.6% to $3.68mn, the lowest level since 2006.
- Lower and less frequent bonuses saw median ASX100 CEO cash pay fall 26.4% to $1.98mn, the lowest since FY03.
- Pay cuts in response to the pandemic and new CEO appointments also saw median fixed pay for ASX100 CEOs fall 5.1% to $1.68mn, the lowest since FY07.
Termination payments jump
Aggregate termination payments nearly doubled in FY20:
- The two largest payouts – at Oil Search and APA group – were for CEOs not subject to Australia’s Corporations Act requirements for shareholder approval.
- Four ASX100 CEOs received payments of more than $3mn each in FY20.
- The average termination payment soared 58% to $2.07mn in FY20 as 16 CEOs shared $33.18mn, compared with $18.35mn across 14 CEOs in FY19.
- APA Group’s Mick McCormack received $6.59mn, the highest termination payment since FY15.
- The next highest, just under $5mn, was received by another long-serving CEO, Oil Search’s Peter Botten.
Share prices still deliver high rewards
Substantial share price gains, and large equity allocations, delivered significant wealth for a small group of CEOs:
- For the first time in ACSI’s study, realised pay for a CEO topped $40mn – CSL’s Paul Perreault realised $43.04mn (FY19: $30.53mn).
- ACSI’s first-time calculations of realised pay for CEOs of 12 ASX200 companies based outside Australia showed how significant the effect is of benchmarking salaries to different jurisdictions - ResMed’s US-based CEO Mick Farrell realised pay of $45.59mn while fellow Californian-resident, Avita Medical’s CEO Michael Perry, came in at $37.57mn.
- By contrast, the five New Zealand based CEOs realised collective pay of just $9.28mn.
Shifting group of companies in top 10 groups:
- No ‘big four’ bank CEO has made either the Top 10 realised or reported pay in four years. The last was Commonwealth Bank’s Ian Narev in 2016, who earned $12.26mn on a realised pay basis and $8.77mn in reported pay.
