Golden handshakes to departing ASX100 CEOs hit 12-year high

The latest CEO Pay in ASX200 Companies report prepared by the Australian Council of Superannuation Investors (ACSI) with research conducted by Ownership Matters, found there were 17 termination payments for ASX100 CEOs in FY23 - the largest number since it began collecting this data in FY08.

The highest termination payment was US$5.06 million ($7.5 million) to Paul Perreault of biotechnology giant CSL (ASX: CSL) after he stepped aside in March 2023.

This is still substantially less than the $21.4 payout for former Qantas (ASX: QAN) chief exec Alan Joyce, even if investors manage to claw back half of that figure. A reported FY23 pay of $11.9 million was listed for Joyce in the study.

"The Qantas board has deferred its decision on vesting of the annual incentive and FY21 LTI in the wake of the ACCC ‘ghost flights’ action and the High Court’s 2023 decision to uphold the findings of lower courts that the airline illegally terminated ground crew during the pandemic," the report authors clarified.

The average termination payment per CEO in the ASX100 was $1.97 million, down 19 per cent year-on-year.

Far fewer CEOs quit their jobs or had their employment terminated in the ASX101-200 range of companies, with $6.28 million worth of termination payments doled out to seven departing leaders for the year, compared to $13.22 million shelled out to nine in FY22.

The highest termination payment within this bracket was to former Boral CEO Zlatko Todorcevski at $1.93 million.

This high number of exits led the ACSI to conclude that in FY23 a CEO was more likely to lose their job than their bonus. The report author's conclude CEO bonuses are not genuinely at risk as only eight ASX200 CEOs received no bonus at all in FY23.

Just two of these execs who received no bonus were from ASX100 companies - Domino’s Pizza Enterprises’ (ASX: DMP) Don Meij and Medibank’s (ASX: MPL) David Koczkar.

Despite not receiving a bonus, Koczkar's remuneration was down slightly by 3.1 per cent to $3.3 million. Meanwhile, Meij's remuneration dropped by 31 per cent to $1.1 million, although he still has a 0.67 per cent direct holding in the company which is currently worth about $20 million. 

The median realised pay in the top 100 declined by $60,000 to $3.93 million, representing the lowest level since the ACSI started collecting this data 10 years ago. But this may just be a matter of timing, as reported pay levels edged up as a signal of larger future payouts.

ACSI chief executive officer Louise Davidson warned that if CEO payment outcomes were not monitored closely to ensure they aligned with market expectations, there was a risk of a "breakout in executive pay which could serve to undermine confidence in Australia’s largest companies".

"The results of this year’s research indicate that the efforts of investors, and greater scrutiny from Australian boards, have seen CEO pay levels hold or decrease in many of Australia’s largest listed companies. This is encouraging," Davidson wrote in the report.

"The importance of investor scrutiny is also apparent from the finding that ASX100 CEO fixed and cash pay remains static.

"These components of CEO pay attract scrutiny from investors because they often have the least correlation with shareholder returns."

She noted there were a record 41 strikes against ASX300 companies’ remuneration reports in 2023, suggesting many investors also had serious doubts.

The highest paid CEOs on the ASX

Greg Goodman, the founder of industrial property developer Goodman Group (ASX: GMG), took home the highest realised pay packet for any CEO of an Australia-domiciled ASX-listed company at $27.3 million. This was the second year running that he achieved this feat, bringing in $44.3 million the previous year.

Macquarie Group's (ASX: MQG) came in second once again with $25.3 million, followed by BHP (ASX: BHP) CEO Mike Henry with $19.7 million, Commonwealth Bank's (ASX: CBA) Matt Comyn at $10.5 million, and Rio Tinto's (ASX: RIO) Jakob Stausholm at $10.5 million.

For ASX101-200 CEOs, the highest paid was Webjet's (ASX: WEB) John Guscic whose income nearly doubled to $7.5 million, actually putting him higher than the 10th ranked ASX100 CEO on this metric, Brambles' (ASX: BXB) Graham Chipchase.

What was also notable at this end of the ASX200 was that for the first time in a decade, not a single ASX101-200 CEO received realised pay of more than $10 million in FY23.

In FY22 there were three companies whose CEOs hit that benchmark - Alex Dorsch of Chalice Mining (ASX: CHN), Jason Huljich and John McBain of Centuria Capital Group (ASX: CNI), and Ian Macoun of Pinnacle Investment Management (ASX: PNI). A fourth, Phil Ryan of City Chic Collective (ASX: CCX), came very close.

The highest realised pay for the CEOs of all ASX-listed companies, including those registered abroad, were for Mick Farrell of sleep apnoea medical technology group ResMed (ASX: RMD) at $47.6 million, and Robert Thomson of News Corporation (ASX: NWS) at $41.5 million.

Whilst realised pay was down, reported pay was up by 7.1 per cent on average at $5.56 million for ASX100 CEOs, and 11.5 per cent higher at $3.01 million for those at the top of ASX101-200 companies. These figures include the estimated value of future incentives.

The spike in the ASX101-200 average was propelled higher by Victor Herrero of jewellery retailer Lovisa (ASX: LOV). His reported pay of $29.09 million was the highest ever recorded in the sample, falling just short of ASX100 highest paid CEO Shemara Wikramanayake at Macquarie Group  a company with a market capitalisation that is 20 times that of Lovisa.

CEOs with reported pay that was much higher than realised pay included Premier Investments (ASX: PMV) Richard Murray, who has since resigned and is now CEO of Total Tools, a subsidiary of Metcash (ASX: MTS).

Murray's reported pay stood at $7 million versus realised pay of $3.9 million. There was also a gap for Jane Hastings of EVT (ASX: EVT), a group that owns hotel brands Rydges, QT and Atura, Thredbo ski resort and cinema chains such as Event, CineStar and BCC, as her reported pay was $5 million versus $3.9 million received for the year.