Following our recent newsletter on the internal relativity pay analysis within the ASX 300 (see HERE), we have taken a step further to study the position distribution for the first, second, and third highest direct CEO reports.

The business unit head position includes any executive that oversees a profit generating business segment. The ‘Others’ position refers to a collection of all other positions from the sample. The larger prevalence for both these positions is partly attributable to their aggregate nature.

Our data on the median dollar value for executive pay and median pay percentages relative to the CEO provides a benchmark for understanding the relativity of executive pay by positions.

Table 1 and Table 2 present the percentages of positions based on total fixed remuneration (TFR) and total remuneration (TR), respectively.

Table 1: Direct report position distribution – total fixed remuneration

 

Table 1 indicates that the Chief Financial Officer (CFO) and Business Unit Head positions are the highest TFR direct reports. The CFO position is the most common highest paid direct report, while the Business Unit Head position becomes more common in the second and third highest paid direct reports. The Chief Operating Officer (COO) and ‘Others’ positions also have significant representation, indicating a diverse range of positions in the top paid direct reports.

Table 2: Direct report position distribution – total remuneration

 

Similar trends are observed in table 2. The CFO and Business Unit Head positions remain the most common among the highest paid direct reports. Moving from highest paid direct report to third highest paid direct report shows the decline in prevalence of CFOs and an increase in Business Unit Heads.

Figure 1: Position distribution for highest paid direct reports – total fixed remuneration

Figure 2: Position distribution for highest paid direct reports – total remuneration

Table 3: Median remuneration dollar values by positions

 

The following insights can be drawn from Table 3:

• Business Unit Head has the highest median TR at $1,869,552, which is significantly higher than the total sample median of $1,399,270. This suggests that Business Unit Heads are among the highest compensated positions in the organisation.
• The Company Secretary and Chief Technology Officer have the lowest median TRs among the positions listed, at $908,818 and $1,100,040 respectively.
• Business Unit Head and Chief Risk Officer have the highest median TFR
• The Chief Investment Officer has the highest median short-term Incentives (STI) at $736,118, indicating a strong emphasis on short-term performance-based pay in this position.
• The positions with the highest long-term incentives (LTI) are the Business Unit Head and Chief Technology Officer, suggesting that these positions are incentivised for long-term performance and strategic goals.

Table 4: Median remuneration ratios by positions relative to CEO

 

Table 4 shows median remuneration ratios between executives and CEOs. The following insights can be gleaned:

• The total sample median TR ratio is 45%. This suggests that executives earn about half of what the CEO earns.
• Chief Financial Officer has the highest median TFR ratio and Chief Operating Officer has the highest median TR ratio relative to the CEO, at 57% and 47% respectively.
• Chief People Officer has the lowest median LTI ratio at 20%.
• Note the “Others” category has the highest median TFR and TR ratios relative to the CEO, at 58% and 49% respectively.

Methodology

Statutory remuneration data used in this analysis was sourced from GuerdonData®. Only data for incumbents with at least 3 years tenure at the end of the financial year were utilised. Doing so allows for a robust look at pay trends across the companies. This sample accounts for 148 companies with the remuneration for the CEOs and direct reports disclosed. Companies with financial year end December 2023 were included where available.

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