ACSI releases report on CEO

pay The results of the 13th Annual ACSI Survey of Chief Executive Remuneration demonstrate how continued investor scrutiny and increased vigilance by company boards has substantial positive impacts for shareholders.  Specifically, there has been a fall in annual costs to ASX 100 companies for CEO termination payouts decreasing from $83 million in 2008 to just under $12 million in 2013.  Fears of increased executive pay levels following the 2009 reforms to the Corporations Act 2009 (Cth) (which limited the size of senior executive termination payments without shareholder approval) appear to have been unrealised.

The Australian Council of Superannuation Investors (ACSI) has released its13th Annual ACSI Survey of Chief Executive Remuneration(Survey) for S&P/ASX 200 CEOs for the 2013 financial year, which demonstrates the benefit to shareholders of investor scrutiny and increased vigilance by company boards themselves.  Key findings from the Survey include:

  • a fall in the median termination payout to ASX100 CEOs from $3.5 million in 2008 to $1.19 million in 2013;
  • a fall in annual costs to ASX 100 companies from 13 CEO termination payouts in 2008 totalling more than $83 million to nine payments in 2013 totalling just under $12 million;
  • a fall in the median ASX 100 CEO’s fixed pay from $1.95 million in 2012 to $1.83 million in 2013 (with average pay remaining relatively flat since 2008);
  • a fall in the median and average cash bonuses for ASX 100 CEOs to the lowest levels recorded for a decade (although the proportion of CEOs receiving a bonus rose from 82% to 87%);
  • a fall in the median cash pay for ASX 100 CEOs by 12.4% to $2.53 million, its lowest level since 2006;
  • a rise in average cash pay for ASX 101-200 CEOs from $1.27 million to $1.35 million (although median cash pay declined reflecting the increased number receiving no bonus); and
  • a rise in total statutory pay (including the value of equity) for ASX 100 CEOs, with the average rising 2.9% to $4.84 million and the median rising 4.3% to $4.16 million.

ACSI has also commented that the fact that it has made materially fewer recommendations to vote against ASX 200 remuneration reports over the past year underlines the growing commitment of boards to ensure that the overriding purpose of pay structures and incentive schemes is to deliver value for long-term shareholders.