A recent study by the Governance Institute of Australia revealed that senior executives at some of Australia’s largest listed companies have enjoyed significant pay rises, averaging more than double the rate of inflation over the past year.  

The findings, released in the annual Board & Executive Remuneration Report, shed light on the increasing remuneration packages for Managing Directors and CEOs across ASX listed companies. 

According to the report, the base salaries of Managing Directors in ASX listed companies rose by an average of 14%, while CEO salaries experienced an average increase of 15%.  

The study focused on ASX 200 companies and found that Managing Directors recorded an average fixed pay increase of 19%. These figures indicate a considerable upward trend in executive remuneration and reflect the impact of a tight labor market and the rising cost of living. 

McGuirk Management Consultants, in collaboration with the Governance Institute, conducted the survey, which included 1,167 boards from various sectors, including the public, private, and not-for-profit sectors, with 226 listed companies participating.  

The report also incorporated publicly available data to provide a comprehensive analysis of the current executive remuneration landscape. 

Governance Institute CEO Megan Motto highlighted that these substantial pay increases come after years of relatively modest rises in fixed pay for executives. 

“These are significant increases off the back of several years of relatively small rises in fixed pay for executives,” she said. 

“With AGM season looming, boards will need to have a strong narrative around their remuneration policies to stand up to shareholder scrutiny and manage reputation risks.” 

Related: Megan Motto of the Governance Institute on improving public sector governance 

Additional data revealed that the average fixed remuneration for an ASX 200 Managing Director amounted to $1.58 million. Moreover, 52% of listed company Managing Directors were eligible for performance bonuses, with the average maximum bonus reaching 89%. For listed CEOs, 51% were eligible for performance bonuses, with an average maximum bonus of 72%. 

The study also indicated that fixed pay rises of more than 10% were observed for positions such as Company Secretary, Chief Digital Officer, General Counsel, and Chief People and Culture Officer in ASX listed companies.  

This trend suggests that organizations are focusing on recruitment strategies to adapt to changing regulatory environments, evolving work practices, cybersecurity, and digital transformation. 

Megan Motto acknowledged the significance of remuneration in attracting top candidates, citing the inclusion of roles like Company Secretary on the skills shortage list.  

“Remuneration is a key factor for candidates, and with roles like Company Secretary now on the skills shortage list, it’s not surprising we’re seeing some really big jumps in base salaries for these positions,” she said. 

The report further disclosed that ASX listed board remuneration primarily relied on consultant benchmarking and industry surveys. With these findings, boards are encouraged to develop transparent and compelling remuneration policies that can withstand shareholder scrutiny and effectively manage reputation risks in an increasingly competitive market. 

Download the Full GIA Report now to explore the impact of inflation and labor market pressures on senior executives’ pay rises.