Three lessons from Australia’s highest paid chief executives

Australia’s top chief executives are getting a lower base pay, but that’s not stopping them collecting million-dollar bonuses to add to their pay packets.

The Australian Council of Superannuation Investors annual survey of chief executive pay in listed companies gives some valuable insights to sentiment at the big end of town. Here are three lessons from the data:

Bonuses are big

A whopping 93% of Australian chief executives considered in the pay survey received a bonus last year – the highest in the history of the study. The median bonus received was $1.6 million on top of the base pay received.

But there’s a gap between companies in the ASX100 and those outside that group, which indicates that the smaller the company, the more difficult it might be to secure a bonus. One third of chief executives in the ASX101-200 company bracket did not receive any extra payments and those that did actually received a median payment 1.6% lower than they did last year – at $329,000.

David Jones, senior managing director at Robert Half Asia Pacific, says that the focus on bonuses is reflective of a conscious effort to spend staffing money with outcomes in mind – a trend that has been playing out since the Global Financial Crisis.

“Because of these bonus structures, companies are able to better link remuneration to performance rather than focusing on fixed salary components,” he told SmartCompany.

There’s a new kind of top paid chief

A quick look at the top 10 highest paid individuals highlights that bankers and mining magnates haven’t had such a good run for salaries over the past couple of years.

The biggest earners are instead across the food, consumer, tech and retail space – including Andrew Bassat of Seek at the second highest paid, and Don Meij of tech pizza outfit Domino’s coming in at number seven. Those in the retail game are also still taking home big figures– Peter and Steven Lowy of Westfield Corporation are the best paid executives in the country, while Peter Allen of shopping centre owners Scentre Group is number three. This transition aside, the top earners were again all male chief executives.

Pay is not just about the weekly salary

The study found that average realised pay was significantly higher than reported pay on average, highlighting that there’s more to executive salaries than the basics of what lands in the bank account each week.

Average realised pay in the 2015 financial year was $5,542,000, while the reported pay hit around $4,992,000. Aside from bonuses, these figures are affected by shares owned by chief executives in the businesses they run and any exercising of options of new equity granted to management, making the task of assessing overall pay a matter of piecing together many puzzle pieces.

The top five highest paid Australian chief executives

1. Peter and Steven Lowy – Westfield Corporation: Realised Pay: $24,753,949 Reported Pay: $21,706,363
2. Andrew Bassat – Seek Limited: Realised Pay: $19,388,403  Reported Pay: $4,894,439
3. Peter Allen – Scentre Group Realised Pay: $17,863,624  Reported Pay: $9,238,497
4. Nicholas Moore, Macquarie Group: Realised Pay: $16,308,753 Reported Pay: $16,495,070
5. Louis Gries – James Hardie Industries: Realised Pay: $15,492,620 Reported Pay: $13,523,775

Here reported pay relates to an individual’s base salary, realised pay includes other forms of payment and bonuses.