'Golden parachutes' for Australia's top corporate leaders drop to lowest level in 15 years
So-called "golden parachutes", or big pay-outs when the leaders of Australia's largest listed companies leave, might be a thing of the past.
The Australian Council of Superannuation Investors' annual review of how much chief executive officers at ASX 200 companies are paid found termination payouts have dropped to their lowest level in 15 years.
Total termination payouts have dropped to $8.4 million in the financial year 2024, down from $33.5 million the previous year.
Some of that is explained by a smaller number of departures; however, the average payout per CEO also fell, from $1.97 to $1.4 million.
"The research indicates this is saving Australian investors about half a million dollars per termination," said ACSI's executive manager of stewardship, Ed John.
Mr John noted that there has been a continual decline in the size of payouts since the Corporations Act changed in 2009 after the global financial crisis.
"This was a really major issue in Australia, and we saw more than $80 million of shareholders' money paid out to terminated CEOs before the law was changed in 2009," he said.
"What those laws did was give shareholders a vote on large termination payouts.
At Australia's largest listed companies, in the ASX 100, leaders' salaries come in at 55 times the average earnings of an Australian worker, despite flattening over the past decade.
That's up from 50 times the average earnings in the 2023 financial year, but down significantly from 2014, when CEO salaries were 71 times the average worker's.
"Australia is actually doing well relative to other markets where there's been a significant breakout in CEO pay," said Mr John.
"There's been recent studies that show CEO pay is a multiple of about 106 times median salaries in the UK and in the US, that's actually more than 300 times in the largest companies."
This table shows the chief executives with the highest realised pay (which includes fixed pay and bonuses received):
The top earner was US-based Robert Thomson, who runs News Corporation, and earns almost $42 million a year.
The only woman on the list, Shemara Wikramanayaka, CEO of Macquarie Group, made just shy of $30 million last financial year.
The median realised pay for ASX 100 leaders, which includes fixed pay and bonuses received, was $4.15 million, compared to $3.96 million in 2014.
Corporate governance expert, Swinburne University's Helen Bird, said the two-strike rule against remuneration has had a dampening effect on pay rises.
It is designed to hold directors accountable for executive salaries and bonuses.
That is because if shareholders vote against a company's remuneration report two years in a row, the entire company board can face re-election.
While salaries at the very top end of town have been (relatively) constrained in recent years, the bosses of smaller listed companies are enjoying increasingly generous paydays.
The highest-paid Australian-based chief executive was Lovisa boss Victor Herrero.
The jewellery chain has a market capitalisation of $3.6 billion. In comparison, the Commonwealth Bank's market value is around $302 billion.
CEO pay at smaller listed companies has increased over time, with the median climbing from $1.74 million in 2014 to $2.2 million in 2024.
"The trend in small companies is interesting, so we'll have to do further work on this," said Mr John.
Most chief executives received a bonus in 2024, with just five of the 142 eligible leaders missing out altogether, with most tied to company performance.
Those left without a bonus were Tony Lombardo from Lendlease, Credit Corp's Tom Beregi, Mark Allison from Elders, Jamie Pherous from Corporate Travel Management, and Julian Fowles from Karoon Energy.
The median CEO bonus was paid at just under 66 per cent of the maximum, which is in line with the long-term trend.
"There is a concern among investors that in some places these are becoming a given or an expectation," said Mr John.
"What we see is that the fixed rate of pay, which is the very basic salary of a CEO, hasn't changed much, but they're still getting very significant bonuses, up to 60-70 per cent of their entitlement is being paid, so they're getting quite significant incentives to work harder," said Ms Bird.
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ABC News
4 hours ago
- ABC News
'Golden parachutes' for Australia's top corporate leaders drop to lowest level in 15 years
So-called "golden parachutes", or big pay-outs when the leaders of Australia's largest listed companies leave, might be a thing of the past. The Australian Council of Superannuation Investors' annual review of how much chief executive officers at ASX 200 companies are paid found termination payouts have dropped to their lowest level in 15 years. Total termination payouts have dropped to $8.4 million in the financial year 2024, down from $33.5 million the previous year. Some of that is explained by a smaller number of departures; however, the average payout per CEO also fell, from $1.97 to $1.4 million. "The research indicates this is saving Australian investors about half a million dollars per termination," said ACSI's executive manager of stewardship, Ed John. Mr John noted that there has been a continual decline in the size of payouts since the Corporations Act changed in 2009 after the global financial crisis. "This was a really major issue in Australia, and we saw more than $80 million of shareholders' money paid out to terminated CEOs before the law was changed in 2009," he said. "What those laws did was give shareholders a vote on large termination payouts. At Australia's largest listed companies, in the ASX 100, leaders' salaries come in at 55 times the average earnings of an Australian worker, despite flattening over the past decade. That's up from 50 times the average earnings in the 2023 financial year, but down significantly from 2014, when CEO salaries were 71 times the average worker's. "Australia is actually doing well relative to other markets where there's been a significant breakout in CEO pay," said Mr John. "There's been recent studies that show CEO pay is a multiple of about 106 times median salaries in the UK and in the US, that's actually more than 300 times in the largest companies." This table shows the chief executives with the highest realised pay (which includes fixed pay and bonuses received): The top earner was US-based Robert Thomson, who runs News Corporation, and earns almost $42 million a year. The only woman on the list, Shemara Wikramanayaka, CEO of Macquarie Group, made just shy of $30 million last financial year. The median realised pay for ASX 100 leaders, which includes fixed pay and bonuses received, was $4.15 million, compared to $3.96 million in 2014. Corporate governance expert, Swinburne University's Helen Bird, said the two-strike rule against remuneration has had a dampening effect on pay rises. It is designed to hold directors accountable for executive salaries and bonuses. That is because if shareholders vote against a company's remuneration report two years in a row, the entire company board can face re-election. While salaries at the very top end of town have been (relatively) constrained in recent years, the bosses of smaller listed companies are enjoying increasingly generous paydays. The highest-paid Australian-based chief executive was Lovisa boss Victor Herrero. The jewellery chain has a market capitalisation of $3.6 billion. In comparison, the Commonwealth Bank's market value is around $302 billion. CEO pay at smaller listed companies has increased over time, with the median climbing from $1.74 million in 2014 to $2.2 million in 2024. "The trend in small companies is interesting, so we'll have to do further work on this," said Mr John. Most chief executives received a bonus in 2024, with just five of the 142 eligible leaders missing out altogether, with most tied to company performance. Those left without a bonus were Tony Lombardo from Lendlease, Credit Corp's Tom Beregi, Mark Allison from Elders, Jamie Pherous from Corporate Travel Management, and Julian Fowles from Karoon Energy. The median CEO bonus was paid at just under 66 per cent of the maximum, which is in line with the long-term trend. "There is a concern among investors that in some places these are becoming a given or an expectation," said Mr John. "What we see is that the fixed rate of pay, which is the very basic salary of a CEO, hasn't changed much, but they're still getting very significant bonuses, up to 60-70 per cent of their entitlement is being paid, so they're getting quite significant incentives to work harder," said Ms Bird.
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The Age
4 hours ago
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CEO wages are falling and golden parachutes have collapsed
Australia's top chief executives have watched their collective pay packets shrink in real terms over the past decade, and termination payouts are down nearly 90 per cent since a crackdown on egregious 'golden parachute' exits during the global financial crisis. Research from governance advisory group the Australian Council of Superannuation Investors (ACSI) shows investors have successfully reined in the pay of ASX-listed CEOs with the help of changes to the Corporations Law after the financial crisis and backlash over egregious pay practices. But it flagged more work is needed on overly generous bonuses for company bosses. ACSI head Louise Davidson pointed to the big fall in termination payments as a significant achievement over the past decade. In 2008, such payments totalled $83 million, compared with $8.4 million last year. 'These payments were a major issue in the Australian market,' she said. 'In 2008 and 2009 alone, termination payments to executives of major public companies cost shareholders over $117 million.' ACSI's research showed the fixed pay component for ASX100 CEOs has stayed largely flat over the past decade, with the median salary of $1.76 million last year slightly below where it was in 2014 – which means it has actually shrunk significantly after accounting for inflation. Factors for the collective pay cut include top-earning CEOs at high-profile companies such as Commonwealth Bank, Qantas and Telstra being replaced by executives on contracts with lower fixed pay and stronger incentives to align their performance with investors' interests. ASCI's research says realised CEO pay – which reflects what these bosses actually earn when bonuses and share options are properly accounted for – has also shrunk in real terms. The median realised pay for ASX100 executives hit $4.15 million last financial year, compared with $3.96 million in 2014.
