This article looks at the changes to ASX 300 CEO performance-based remuneration received from 2012 to 2013 (using the same methodology as for our 2013 CEO pay increase analysis).

Overall there was a decrease in the frequency of short-term incentives (STIs) and an increase in the frequency of long-term incentives (LTIs). Average STIs increased by 2% and LTIs by 5%. Trends varied across different sectors and company sizes.

Change in Remuneration Structure

Overall, at-risk remuneration has decreased marginally, from 54% to 53%.

Table 1 shows the CEO pay mix for 2013 and 2012. Only CEOs who were in the position for both years are included.

Table 1: Remuneration structure

 

The following figures show the STI and LTI frequency in 2012 and 2013 by company size. Q1 represents the smallest companies (based on market capitalisation) and Q4 represents the largest.

Figure 1: STI frequency in 2012 to 2013 by company size

Figure 2: LTI frequency in 2012 to 2013 by company size

The percentage of pay made up of STIs has reduced for smaller companies due to the reduction in the frequency.

Figure 3 shows the change in pay mix from 2012 to 2013, by company size.

Figure 3: Change in pay mix 2012 to 2013 by company size

The change in remuneration mix also varied by sector, as seen in Figure 4. The Utilities sector sample size is small and the results should be interpreted accordingly.

Figure 4: Change in pay mix from 2012 to 2013 by sector

Most sectors have consistent pay mix statistics for both years. However, the Health Care sector produced an average increase of 50% in the value of LTIs and this has changed the pay mix of the sector. Industrials experienced a drop in the occurrence of STIs and Utilities experienced an increase in the average size of LTIs.

The finance sector has the highest proportion of pay at risk at 65% and the consumer sector has the lowest at 45%.

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