CEO pay falls to lowest in nine years, bonuses shrink

The median fixed pay for 2022 was $1.74 million, the lowest in a decade and down from $1.95 million in 2012 as the boards of companies such as Qantas and Telstra used the appointment of new CEOs as an opportunity to whittle down salaries.

Griffith Business School Professor Nick Barter says the pay drop is a welcome trend.

“There may be some humility coming back where people are starting to take a more systemic perspective of businesses and realise this notion of hero CEOs doing everything themselves is nonsense. But also there may be some broader trends like we are experiencing a slowdown, we’re all feeling a bit poor, and consequently, it’s a bit unsavory and unseemly to pay CEOs excessive amounts,” he says.

ACSI’s research over the past nine years has focused on executive “realised pay” as opposed to the statutory pay, which is reported in company financial accounts each year.

The difference between the two is that realised pay is viewed as a more accurate measure of what the CEOs actually receive in terms of cash and shares. Statutory pay relies on estimates of a company’s future share price and other factors.

Whether this pay slump is merely a post-COVID hangover, or a real trend, remains to be seen, but faltering economic conditions should keep the pressure on executive pay for 2023 at least.

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“Investors will be watching closely as reporting season gets under way, and we see the numbers for 2023. It has been a choppy year for investors in many companies – boards will need to consider performance carefully when deciding on remuneration this year,” John said.

“If performance is down in 2023, we expect to see bonuses follow.”

The research noted that overseas based CEOs were paid significantly more than their Australia-based counterparts coming in at an average of $11.1 million compared to the $4.2 million for the 159 locally-based CEOs.

Resmed’s CEO, Mick Farrell, led the field for realised pay last year with $47 million, followed by Goodman Group’s Greg Goodman with $44.3 million.

Macquarie Group’s Shemara Wikramanayake has become the first woman to top the reported earnings table for in successive years, with $23.7 million in 2022 and $16 million in 2021.

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