CEO pay restrained by fund pressure

Fixed pay for ASX 100 CEOs is lower now than in 2012, according to the Australian Council of Superannuation Investors (ACSI), as super funds and institutional investors put pressure on remuneration committees to avoid salary surges witnessed overseas.

The ACSI report into executive pay, CEO Pay in ASX 200 companies, has tracked CEO remuneration for 24 years.

It represents asset owners and institutional investors managing more than $2.2 trillion, and they said continued engagement by investors and boards had prevented the sharp escalation in executive pay seen overseas, despite a rise in realised remuneration across Australia’s largest listed companies.

This year, the ASX 100 saw a 4 per cent rise to a median of $1.83 million, but it noted CEOs are still receiving less than their colleagues were in 2012 when they took home a median of $1.95 million.

ACSI executive manager, stewardship, Ed John said that discipline had been driven by shareholder oversight rather than market forces alone.

“The diligence of Australian investors and boards continues to mean ASX CEO pay levels have generally avoided the runaway increases we’ve seen elsewhere. It also means that where CEOs appear in the highest paid list, their companies will generally have delivered strong performance over the long-term.”

Leading the FY25 rankings was Life360’s Chris Hulls with a reported pay of $47.7 million, ahead of ResMed’s Mick Farrell and News Corporation’s Robert Thomson.

However, performance incentives remained firmly embedded in executive remuneration.

John said investors could not afford to assume Australia’s remuneration framework would remain insulated from overseas trends.

“Investors cannot become complacent, with clear evidence that CEO bonuses continue to be a ‘given’ in Australia’s largest companies. This year investors will need to remain vigilant to ensure that we do not see the inflation in CEO salaries or a pay ‘break-out’ that we see in markets like the US.”

The report also highlighted the cost of executive turnover, with termination payments to departing ASX100 chief executives reaching $18.6 million in FY25 after nine executives received payouts, up from six the previous year.