It is once again time for Guerdon Associates’ annual review of remuneration changes for Chief Executive Officers (CEOs) and Managing Directors (MDs) who led ASX 300 companies in the past 2 annual reporting periods.

Summary

CEOs recorded greater fixed remuneration increases than the general population. This has not happened often in the past 15 years, although it did occur 2 years ago.

The CEO fixed pay increase was 3.8%. For context, the Australian Bureau of Statistics Wage Price Index rose by 3.5% over the year to September 2024. This marks a shift from the previous year where CEO pay increases (2.9%) were smaller than those for the general population.

Guerdon Associates reviewed the change in statutory remuneration from FY23 to FY24 for 144 full-year, same incumbent CEOs of ASX 300 companies.

Remuneration data was sourced from GuerdonData® and annual reports. Data for total shareholder return (TSR) was sourced from LSEG (formerly Refinitiv®).

The median increase in CEO total remuneration (TR) was 7.8%, driven by median increases in total fixed remuneration (TFR), short-term incentives (STI), and long-term incentives (LTI) of 3.8%, 7.2%, and 4.2%, respectively.

The median TSR increase (21.3%) was also up on the prior year (13.8%).

Longitudinal trends

Total remuneration (TR) is the sum of total fixed remuneration (TFR), short-term incentives (STI), and long-term incentives (LTI). TFR, STI, and LTI are based on statutory disclosures, which include the amortised value of current, deferred compensation, and share-based payments expense when incentives are delivered in the form of equity instruments.

As shown in figure 1, the increase in TR this year of 7.8% reflects a return to typical TR growth levels, following a significant decline during the COVID period and subsequent recovery spike in the two years that followed.

Figure 1: Median % change in total remuneration for all CEOs since FY16-17.

Table 1 displays the median year-on-year change in each remuneration component over the 3 most recent two-year periods; for further details, refer to Guerdon Associates’ annual reviews of executive remuneration changes for FY21-22 and FY22-23.

Table 1: Median % change in each remuneration component for full year ASX 300 same incumbent CEOs, over the last 3 years.

 

Figure 2 visualises the change in CEO remuneration over the past two reporting periods by comparing the averages and quartiles of each remuneration component for FY23 and FY24, in millions of Australian dollars.

Figure 2: Comparison of FY23 and FY24 remuneration (in $m) for all CEOs, by each remuneration component.

The remuneration component averages saw increases in TFR and STI, while LTI decreased. All 3 components, and the resultant total, experienced a positive median change.

TR exhibited a slightly tighter spread this year, as indicated by the decreased interquartile ranges from FY23 to FY24. The spreads for TFR, STI and LTI remained relatively unchanged.

Component changes

Figure 3 shows the proportion of CEOs that saw year-on-year changes versus those where remuneration remained flat and those where remuneration decreased.

Figure 3: Percentage increases/decreases in each remuneration component grouped by substantial changes (greater than 1%) and minor changes (within 1%).

Sixty-seven percent of CEOs saw an increase in TFR in line with 65% last year. Nine percent of CEOs experienced a decrease in TFR, down from 13% in the previous year. As this analysis reviews statutory remuneration rather than contractual remuneration, decreases in TFR may occur year-on-year due to differences in exchange rates or non-monetary benefits paid. The decreases in most cases would not represent decreases in contractual remuneration.

Twenty four percent of CEOs’ TFR remained mostly unchanged, consistent with values of 22% and 24% in the two years prior.

Sixty two percent of CEOs had an increase in STI, greater than 44% in the year prior. The proportion of CEOs receiving STI reductions was 35%, a decrease from 55% in the previous year. Roughly half of the CEOs (56%) saw increases in LTI, with 43% facing decreases, similar to last year.

Sixty three percent of CEOs saw an increase in TR with 31% receiving decreases. The proportion of TR increases was slightly higher than the previous year (57%).

Overall, CEOs have seen more increases to remuneration during FY23-24 compared to FY22-23, in line with the increase in TSR (21.3%, up on the prior year’s 13.8%.

By company size

Table 2 shows the median change in remuneration and total shareholder return (TSR) for companies broken into size-based groups. The four groups are based on the 30-day market capitalisation quartiles as of 30 September 2024. The TSR is measured over a 1-year period ending 30 September 2024.

Table 2: Median TSR and % change in remuneration components for all CEOs, by market capitalisation quartiles.

 

The data suggests an inversely proportional relationship between company size and CEO TFR increase. Median TFR increases in large companies were 2.2%, up from last year’s 0.9%. In contrast, CEOs of small-to-medium and medium-to-large companies experienced consistent median TFR growth with increases of 4.2% and 2.8% respectively in FY23-24, compared to FY22-23 figures of 4.5% and 2.9%.

The median STI change across all CEOs was 7.2%, marking a shift from last year’s decline of -3.8%. CEOs of small companies saw the largest increase in STI with 8.2% median growth compared to -33.3% the previous year. Small-to-medium and medium-to-large companies also experienced substantial STI growth, rising from -15.3% and -3.3% previously. Large companies were the only group to experience a decrease in median STI growth from last year’s 14.8%.

The overall median LTI increase for all companies was 4.2%, reflecting a decline in growth from last year’s 8.5%. Small-to-medium businesses experienced a median LTI change of -3.3%, following an increase in the previous year of 9%.

The smallest companies saw the largest median increase in TR at 9.9%. TR increases were greater this year than the previous year for all sizes except small-to-medium, with a slight decrease in TR growth of 7.5% in FY23-24 compared to 7.6% in FY22-23.

Median TSR was positive for the overall sample at 21.3%, varying between 1% and 30.4% by company size. Medium-to-large companies observed a slight decline in median TSR, dropping from 21.7% last year to 21.6% this year.

By sector

Table 3 shows the median change in remuneration components by market sector.

Table 3: Median TSR and % change in remuneration components by Global Industry Classification Standard (GICS) sector.

 

All sectors experienced a positive median change in TR, except for Consumer Staples (-10.4%) and Materials (-1.0%).

CEOs of Information Technology companies saw no median change in TR despite having the highest median TSR at 37.8%. A median increase in STI (11.0%) was coupled with a median decrease in LTI (-8.8%) during this period.

Consumer Staples companies saw the greatest median reduction in TR at -10.4%. This corresponds with reductions in STI and LTI being the greatest among all sectors at -38.9% and -19.1% respectively.

The Energy sector saw the second greatest median increase in TR of 23.9% despite having the lowest TSR of -2.0% of the group. This marks a significant shift compared to the previous year’s TSR of 54.0%.

The Industrials sector saw the greatest median change in TR of 24.4% resulting from substantial increases in STI (23.2%) and LTI (22.4%).

Figure 6 shows the distribution of TR changes by GICs sector. Real Estate saw the narrowest spread of TR, with most companies experiencing small positive changes.

Consumer Staples, Consumer Discretionary, and Health Care exhibited the widest range of remuneration changes. Consumer Staples was the only sector with notable density below zero, implying most CEOs had a negative change in TR.

Figure 4: Violin plot of % change in TR by GICS sectors. Line at 0% is an indicator of no change in TR (Utilities omitted due to small sample).

Other Factors Impacting Remuneration

Figure 5 illustrates the change in TFR during FY23-24 for each CEO in relation to their company’s 1-year TSR (total shareholder return) for the period 30 September 2023-2024. This time frame is used for TSR measurement due to the ASX rebalancing on 30 September.

Figure 5: Percentage change in TFR over FY23-24 compared against the 1-year TSR to 30 September 2024 with least squares line of best fit superimposed (R²=0.0133, r=0.1153, p=0.1531).

In FY24, most ASX 300 CEOs saw an increase in TFR compared to FY23, regardless of their companies’ TSR. The majority of ASX 300 companies recorded a positive TSR. However, the simple linear regression (SLR) analysis (p=0.1355) suggests no relationship between TFR and 1-year TSR at the 10% significance level.

Figure 6 plots the CEOs’ FY24 TFR against the log market capitalisation of their respective companies. Log transformations are applied to scale down outliers while maintaining rank. Inferred trends remain true for the underlying data.

Since market capitalisation is an indicator of company size, it can be inferred that larger companies tended to pay more total fixed remuneration.

Figure 6: FY24 TFR compared to log market capitalisation ($m), with line of best fit (R²=0.6143, r=0.7838, p≈0).

Methodology

The ASX 300 incumbents and market data were taken after the September 2024 index rebalancing from LSEG (formerly Refinitiv®). Remuneration figures for the CEOs were obtained from GuerdonData®, a database of remuneration information sourced from the statutory disclosures present in company annual reports.

Companies that have not disclosed their 2024 annual reports at the time of analysis were removed from the sample. Companies that floated on the ASX in FY23 or FY24 were removed, since they have no remuneration disclosures available prior to their listing. Externally managed entities and companies incorporated outside of Australia which do not disclose remuneration in accordance with Australian accounting standards (i.e., AASB) were also removed.

CEOs who changed position over the FY23-24 period or served a part-year term were excluded from the analysis. Termination benefits were removed from CEOs leaving at the end of the FY23-24 period.

Disclaimers:

The segmentation of results into multiple sectors introduces large variability in the observed values due to small sample sizes.

Some results may be reflective of data-mining effects rather than underlying causal factors, due to the limited sample size of 144.

The selection criteria introduce sampling bias due to rebalancing of the ASX 300 index: companies listed on the ASX 300 at a particular time exclude those which have already left the index, and so recently added companies must be considered in their place instead. This may cause a positive bias in reported remuneration figures if there is a positive correlation between share price performance (e.g., TSR) and remuneration, or between market capitalisation and remuneration.

The following abbreviations have been used:

• TFR: Total Fixed Remuneration including cash salary, fringe benefits, and superannuation.
• STI: Short Term Incentives, which is pay contingent on performance measured within a 1-year period.
• LTI: Long Term Incentives, which is pay contingent on performance over a period greater than 12 months (typically 3 or more years).
• TR: Total Remuneration, which is the sum of TFR, STI, and LTI.
• TSR: Total Shareholder Return.
• FY: Financial Year.
• FYE: Financial Year End.
• SLR: Simple Linear Regression.
• AASB: Australian Accounting Standards Board.

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