Chief executives of Australia’s larger companies have received significant increases in pay. With the first company disclosures for the year ending June 30 just being released, CEOs have received overall remuneration increases of 39%, with the median total remuneration received being $1,555,335. Total remuneration includes all elements of pay, such as base salary, superannuation benefits, bonus payments, shares and non-monetary benefits such as cars. Fixed pay comprises non-performance related elements of pay, and excludes all bonuses and long term incentives. This increased almost 25% to a median level of $767,205. Performance pay increased the most. Short term incentives increased by over 52%. Long term incentives, which often comprise of shares and options that will only vest if performance hurdles are exceeded, increased by 66%.
These early trends have been captured by GuerdonData™, a revolutionary on-line database that continuously updates executive and board remuneration as new ASX 300 company disclosures are released. The recent availability of GuerdonData™ will greatly enhance board and investor scrutiny of director and executive pay.
Michael Robinson, a director of Guerdon Associates, a specialist executive and board remuneration consulting firm, advises caution against making generalisations for all companies, given that the many companies are still to report results. However, he also said that while these rates of increase may not be sustained for the remainder of the reporting season, the rate of increase would still be relatively high compared to most years. Investors have enjoyed a period of outstanding business results recently. So it is to be expected that the people who helped bring this about receive a substantial lift in performance pay compared to prior years. Mr. Robinson also said that while investors should expect to pay for performance, it was probably preferable in most situations to ensure that this pay is delivered in the form of a cash bonus or equity, and not in fixed pay.
To the end of last week, ASX 300 companies to report annual results and the pay of their executives and directors for the year ending June 30 included Australian Infrastructure Fund, Ale Property Group, Alesco Corporation Limited, Billabong International Limited, Bendigo Mining Limited, Boom Logistics Limited, Centro Properties Group, Circadian Technologies Limited, CSL Limited, Excel Coal Limited, Healthscope Limited, Investa Property Group, Lend Lease Corporation Limited, Metcash Limited, Perpetual Trustees Australia Limited, Qantas Airways Limited, Record Investments Limited, Stockland, United Group Limited, Sunland Group Limited, Telecom Corporation of New Zealand Limited, Telstra Corporation Limited, Unitab Limited, West Australian Newspaper Holdings Limited, and Worleyparsons Limited.