Executive pay rebounds despite investor concerns

August 19, 2022

Executive pay has rebounded across public and private sectors over the course of 2021, an Australian Public Service Commission report has confirmed, despite the issue being front of mind for investors this AGM season.  

C-suite executives at ASX firms enjoyed a lift in short-term bonus pay-outs, following a brief hiatus during 2020, with a 4% median rise, while other executives received a 4.8% increase during the course of the last year.  

Read Minerva's guide to executive remuneration:

https://www.old.manifest.co.uk/publications/executive-remuneration-investors-guide/

Another report by PwC found that, on average, short-term bonuses amounted to 110% of benchmark targets at the median for chief executives, and 104% for other executives.  

It said the most significant increases were found among the healthcare and real estate sectors for chief executives and executives, while financial services were more restrained. 

Newly appointed CEOs were paid 16% less than their predecessors, however.   

Public sector executives’ salaries also rose after a pause in 2020, which resulted in many senior figures enjoying two base pay rises over the year, adding to a 4.2% hike across the year.

Non-executive base pay also rose 3% over the same period. 

The number of public sector executives taking car allowances as part of their core pay package led to total packages among federal executives rising less than base packages. 

Senior executive service (SES) employees receiving a performance-based bonus remained flat at 4% (out of 115 employees), compared to 4.2% in 2020, with the median SES performance bonus paid up at $10,249. 

In May, an Institutional Shareholder Services (ISS) report revealed that say-on-pay votes, asking investors to approve compensation for top S&P 500 executives, received their lowest levels of support.  

Asset owners and managers are becoming increasingly active in opposing remuneration policies at investee companies, as median pay for S&P executives jumped 9% in 2021 to a record $14.4m, up from $13.2m in 2020.