2012 CEO pay – changes in pay mix

This article looks at the changes to ASX300 CEO performance-based remuneration from 2011 to 2012 (using the same methodology as for our 2012 CEO pay increase analysis).

There was no significant change in the frequency of performance-based remuneration, but there were changes in the quantum of STIs and LTIs within industry and company size subgroups.

Finance sector CEOs were the least likely to receive an increase in fixed remuneration (TFR) and were awarded the smallest increases. Their total remuneration (TR) increased by 7% and this was entirely attributable to larger LTIs.

Energy sector CEOs were awarded the largest increases in fixed and total remuneration, with the increases attributable to all components of remuneration. On average, EPS growth in the energy sector was over 15%.

Change in Remuneration Structure

Overall, at-risk remuneration has remained consistent at 54%.

Table 1 shows the consistent pay mix over 2012 and 2011.

There was no significant change in the percentage of CEOs receiving STIs and LTIs across the full sample of CEOs. However, variations in the quantum did change the overall pay mix for smaller companies.

There was little or no change in pay mix from 2011 to 2012 for the CEOs of the larger companies (Q2, Q3 and Q4). There was a significant reduction in the size of LTIs for smaller (Q1) company CEOs.

Figure 1 shows the change in pay mix from 2011 to 2012, by company size.

0106 figure 1.png

The change in remuneration mix also varied by sector, as seen in Figure 2. Samples from the health care, IT and utilities sectors are small and the results should be interpreted with caution.

For the second successive year, energy sector CEOs had the highest median increase in TR of 29% (13% from 2010 to 2011). All components of remuneration increased, so the pay mix remained similar.

The health care sector had the lowest median changes in TR at close to zero. The 6% median increase in TFR was offset by equivalent reductions in performance-based remuneration.

CEOs from the finance, IT/telco and utility sectors experienced increases in performance-based remuneration, and these sectors have on average achieved sound financial performance during the 2012 FY. The increase is primarily attributable to STIs for the IT/telco sectors, but is wholly attributable to LTIs for finance sector CEOs. CEOs from the health care and materials sector saw reductions in performance-based remuneration

© Guerdon Associates 2024
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