… don’t be too sad for them -- $8m a year can soothe a lot of pain.
The Australian Council of Superannuation Investors has released its annual survey of CEOs’ pay and while the median pay of ASX-listed CEOs has dropped a little, there’s not too much to feel sorry for them about.
The median “realised pay” – the value of cash and equity actually received – has dropped from $3.93 million to $3.87 million per annum – the lowest median in the 10 years the survey has been running.
Top of the health sector pile – at least for Australian-domiciled companies – is Rob Scott, CEO of Wesfarmers, whose realised pay came it at $9.566 million in FY23.
Wesfarmers is a diverse group, including Bunnings, K-Mart, Target and Officeworks, but its healthcare arm runs Priceline Pharmacy, Soul Pattinson, InstantScripts, API, Silk Laser Clinics and Clear Skincare, among others.
Mr Scott’s “reported” pay was listed as $8.175 million.
Of the “pure” healthcare companies, the CEO with the highest realised pay for FY23 was Sonic Healthcare’s Colin Goldschmidt, at $8.350 million for the year. His reported pay was $5.968 million.
The other significant health sector number was the termination payment received by former CSL CEO Paul Perrault — in FY23 it was the highest of all at $7.61 million.
As a comparison against the pay of CEOs of foreign-domiciled ASX200 companies there is no competition.
At the top of list is ResMed’s CEO Mick Farrell, whose realised pay came in at a whopping $47.578 million for FY23.
More generally the ACSI report showed that bonus payments have become the norm, to the point that it is now more likely for a CEO to lose their job than their bonus.
“Bonuses should not become a given in Australian companies,” said Ed John, ACSI’s executive manager of stewardship.
“At a time when companies are focused on productivity and performance, it is critical that bonuses are only paid for exceptional outcomes.
“While overall pay levels have dropped, investors and boards must not become complacent. The numbers show that we could see a breakout in CEO pay levels in future. It will be critical that boards pay close attention and ensure performance hurdles are set at the right levels.”
Key findings included:
- Total realised pay has fallen. ASX100 median CEO pay fell from $3.93 million to $3.87 million. The ASX101-200 median also fell from $2.10 million to $1.95 million;
- CEOs are receiving consistently high bonus awards. The median ASX100 CEO in FY23 received a bonus at 66.3% of maximum (FY22: 71%) while for the ASX101-200 the median bonus outcome was 60.7% of maximum (FY22: 68%);
- Over the nine years the ACSI study has collected CEO bonus outcomes, the median bonus has been at least 60% of maximum every year for ASX100 CEOs (other than the COVID-affected FY20);
- Only two ASX100 CEOs and six ASX101-200 CEOs received zero bonus for FY23 meaning that, once again, a CEO has more chance of being terminated than missing out on a bonus (there were 24 termination payments across the full ASX200 sample in FY23);
- High realised pay outcomes for CEOs in companies listed Australia but based in the US. ResMed’s Mick Farrell again eclipsed the local talent with $47.58 million (FY22: $47.14 million), followed by News Corp’s Robert Thomson on $41.53 million.