'Golden parachutes' for Australia's top corporate leaders drop to lowest level in 15 years
The Australian Council of Superannuation Investors' annual review of how much chief executive officers at ASX 200 companies are paid found termination payouts have dropped to their lowest level in 15 years.
Total termination payouts have dropped to $8.4 million in the financial year 2024, down from $33.5 million the previous year.
Some of that is explained by a smaller number of departures; however, the average payout per CEO also fell, from $1.97 to $1.4 million.
"The research indicates this is saving Australian investors about half a million dollars per termination," said ACSI's executive manager of stewardship, Ed John.
Mr John noted that there has been a continual decline in the size of payouts since the Corporations Act changed in 2009 after the global financial crisis.
"This was a really major issue in Australia, and we saw more than $80 million of shareholders' money paid out to terminated CEOs before the law was changed in 2009," he said.
"What those laws did was give shareholders a vote on large termination payouts.
At Australia's largest listed companies, in the ASX 100, leaders' salaries come in at 55 times the average earnings of an Australian worker, despite flattening over the past decade.
That's up from 50 times the average earnings in the 2023 financial year, but down significantly from 2014, when CEO salaries were 71 times the average worker's.
"Australia is actually doing well relative to other markets where there's been a significant breakout in CEO pay," said Mr John.
"There's been recent studies that show CEO pay is a multiple of about 106 times median salaries in the UK and in the US, that's actually more than 300 times in the largest companies."
This table shows the chief executives with the highest realised pay (which includes fixed pay and bonuses received):
The top earner was US-based Robert Thomson, who runs News Corporation, and earns almost $42 million a year.
The only woman on the list, Shemara Wikramanayaka, CEO of Macquarie Group, made just shy of $30 million last financial year.
The median realised pay for ASX 100 leaders, which includes fixed pay and bonuses received, was $4.15 million, compared to $3.96 million in 2014.
Corporate governance expert, Swinburne University's Helen Bird, said the two-strike rule against remuneration has had a dampening effect on pay rises.
It is designed to hold directors accountable for executive salaries and bonuses.
That is because if shareholders vote against a company's remuneration report two years in a row, the entire company board can face re-election.
While salaries at the very top end of town have been (relatively) constrained in recent years, the bosses of smaller listed companies are enjoying increasingly generous paydays.
The highest-paid Australian-based chief executive was Lovisa boss Victor Herrero.
The jewellery chain has a market capitalisation of $3.6 billion. In comparison, the Commonwealth Bank's market value is around $302 billion.
CEO pay at smaller listed companies has increased over time, with the median climbing from $1.74 million in 2014 to $2.2 million in 2024.
"The trend in small companies is interesting, so we'll have to do further work on this," said Mr John.
Most chief executives received a bonus in 2024, with just five of the 142 eligible leaders missing out altogether, with most tied to company performance.
Those left without a bonus were Tony Lombardo from Lendlease, Credit Corp's Tom Beregi, Mark Allison from Elders, Jamie Pherous from Corporate Travel Management, and Julian Fowles from Karoon Energy.
The median CEO bonus was paid at just under 66 per cent of the maximum, which is in line with the long-term trend.
"There is a concern among investors that in some places these are becoming a given or an expectation," said Mr John.
"What we see is that the fixed rate of pay, which is the very basic salary of a CEO, hasn't changed much, but they're still getting very significant bonuses, up to 60-70 per cent of their entitlement is being paid, so they're getting quite significant incentives to work harder," said Ms Bird.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News.com.au
4 hours ago
- News.com.au
Donald Trump's tariffs have a large role to play in Australia's interest rates cycle
When the RBA handed down its most interest rate decision last month, it shocked economists and the public by holding the cash rate at 3.85 per cent. The widely held consensus had been strongly in favour of another 0.25 per cent cut to follow the previous one in May. In the weeks since the Reserve Bank's decision, economic data has been mixed, with some elements such as the recent retail sales report providing support for the RBA's message of caution, while on the other hand, the recent substantial rise in unemployment was far more supportive of the cash rate being cut. In several important ways the RBA's uncertainty about the path forward for interest rates is arguably justified. Trump, Trade And Global Uncertainty At a global scale, the implementation of the Trump Administration's various tariffs and threats of even greater trade barriers to nation's not willing to make a swift agreement with the United States remains a source of major questions for central banks around the world. The challenge posed by tariffs to the path of interest rates was recently summed up by JPMorgan Chase (the world's most valuable bank) CEO Jamie Dimon at an event hosted by the Irish government. 'The market is pricing a 20% chance (of rising interest rates). I would price in a 40-50% chance I would put that as a cause for concern,' Dimon said. Dimon went on to cite the Trump administration's tariffs, the restructuring of global trade and the growing U.S government budget deficit as inflationary forces impacting the path forward for interest rates. While U.S interest rates can and do rise and fall independently of those of other nations, they are also the most important global benchmark. Theoretically, the U.S Federal Reserve holding a higher interest rate than the RBA can have two major knock on effects for Australia. It can force a repricing of Australian interest rates to better reflect the global benchmark. Or if the RBA chooses to allow the distance between the RBA cash rate and the U.S federal funds rate to expand, it places downward pressure on the value of the Australian dollar in a vacuum. A Mixed Bag For Australia At a domestic level, there is also a high degree of uncertainty impacting the path forward for interest rates. With government currently the driving force behind broader economic growth and employment growth in generally taxpayer funded sectors of the economy (public administration, education and, healthcare and social assistance) the main driver of the resilience of the labour market, it's challenging for the RBA to know exactly when a rate cut would be appropriate. Meanwhile, the deeply mixed nature of retail sales growth depending on the lens with which it is viewed also complicates matters. For example, looking at the latest headline retail sales showing a 1.2 per cent rise in turnover or June in a vacuum, it would be hard to justify a rate cut. But when the focus is shifted to an inflation adjusted figure that looks at retail sales per working age adult, the data for the June quarter reveals a return to recession in per capita terms. This is due to expansion of the population, the vast majority of which is occurring via migration acting as more or less the only driver of the retail economy in aggregate. History And Market Pricing Based on RBA rate cut cycles seen in the last 35 years, where the cash rate has been cut by at least one percentage point, the average rate cut cycle sees mortgage rates fall by approximately 33.3 per cent. If we remove the rate cut cycles driven by major emergencies such as the Global Financial Crisis and the early 1990s recession, the average reduction in mortgage rates falls to 27.0 per cent. If we were to see a similar reduction in interest rates today, we would see a total fall in the cash rate of approximately 1.75 percentage points. This would leave the average payable rate on a variable mortgage for an owner occupier at 4.58 per cent. In terms of the pricing of the future path of interest rates from financial markets, the next full 0.25 per cent rate cut is priced in for the RBA's August meeting, with the next expected to follow in November. Overall, market pricing has interest rates falling by a total 1.33 percentage points, with the cash rate hitting a low of 3.02 per cent during the middle of next year. The Outlook For Rates While the direction of interest rates is ultimately in the hands of the Reserve Bank, under the current circumstances government is also playing a significantly greater role in influencing the path forward than has been historically normal. With the growth in the domestic consumer economy concentrated in the 65 and over age demographic and otherwise reliant on population growth, the level of migration set by the Albanese government will be vital in determining to what degree aggregate consumer demand is weak enough to warrant further cuts in interest rates. Meanwhile, the level of employment growth stemming from government policy will also be a key consideration. If the current pullback continues without a corresponding increase from the private sector, the urgency and magnitude with which the RBA approaches the ongoing rate cut cycle may intensify significantly. Ultimately, it's entirely possible that events beyond our shores end up playing a significant role in the direction of Australian interest rates, whether that be as a result of President Trump's tariffs or the Chinese economy slowing more swiftly than expected due to the ongoing trade conflict and still simmering domestic economic issues.
Sky News AU
6 hours ago
- Sky News AU
Cyprus Community of NSW erupts in backlash after administrators confirm sale of beloved Stanmore site
A heated meeting on July 29 saw Cyprus Community of NSW members accuse administrators of selling the club "from under them" after confirming the $55 million deal with developer Conquest. The nearly one-hectare Stanmore property was sold without a member vote, with administrators claiming the Corporations Act gives them power to proceed during voluntary administration. Members protested outside with signs reading 'Our heritage not for sale' and 'We built this not you', demanding EY stop interfering in community decisions. Administrator Morgan Kelly said the sale was essential to pay off over $20 million in debt, arguing the deal was the best commercial option after assessing seven offers. The full $55 million will be paid by mid-2026, with proceeds to be placed in a trust for a future club purchase, while temporary venues are being arranged for community activities. Members questioned why redevelopment proposals like a 99-year lease were not pursued, and criticised the lack of transparency around bidders and the property steering committee. Tensions also flared over the absence of board elections, which EY blamed on past court injunctions. 'I already have the right (to sell the property as an administrator). That's already there. The court process is orders confirming that administrator order,' Kelly said. The Stanmore clubhouse is also set to close by August 30 due to a fire safety order by the Inner West Council, with Kelly saying the site is no longer legally fit to operate without costly upgrades. Overall, Kelly revealed that financially the community's debt rose from $12 million to over $20 million in one year, worsened by legal battles and delays caused by internal disputes, making the administrators take this decision.
News.com.au
6 hours ago
- News.com.au
‘Disappointing': Outcry after fast-fashion brand Princess Polly earns B Corp certification
Princess Polly, a Gold Coast-founded brand that has taken Gen Z by storm, has recently been named a B Corp certified company. However, the news of the brand's latest achievement has many environmentalists and fashion experts scratching their heads, arguing the fast-fashion brand's certification 'undermines the value and credibility of the accreditation'. More than 7300 businesses worldwide have been Certified B Corp by parent company and global non-profit B Lab. The certification highlights that companies have met certain sustainability and ethical targets, based on strict assessment criteria. Known for its hyper-trendy styles and social media-infused trends that go viral on social media platforms including TikTok, Princess Polly's target audience are women aged 18-26. A fast-fashion brand is defined as inexpensive clothing produced quickly in response to rapidly changing trends. Brands and companies eager for a B Corp certification must undergo a strict round of vetting to pass, earning a minimum score of 80 for its B Impact Assessment, a wide-ranging test comprised of 200 questions that examines a company's impact on the planet in five different categories – environment, community, customers, governance and workers. 'B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input material,' a B Lab spokesman told NewsWire. Princess Polly achieved an 86.8 in its overall impact score, just passing the threshold to be certified and above the median business average of 50.9. However, RMIT School of Fashion and Textiles senior lecturer Harriette Richards said Princess Polly's B Corp certification was 'disappointing' and claimed 'it undermines the value and credibility of the accreditation'. 'It demonstrates the value of the 'sustainability' label as a marketing tool as Princess Polly attempts to position itself as distinct from other ultra-fast-fashion brands such as Shein by claiming that they are sustainable,' Dr Richards said in a statement. 'While they may use more environmentally friendly materials than some of its ultra-fast fashion counterparts, the reality is that their business model, which relies on overproduction and overconsumption, is unsustainable.' Fellow RMIT lecturer Jon Hewitt told NewsWire the fashion brand's 'trend driven, high volume, at low cost' business model 'encourages overconsumption' and the 'prioritisation of quantity over quality', which he said made the brand 'widely criticised as inherently unsustainable'. 'Princess Polly's B Corp certification sends the message that a fashion enterprise only needs to offer some low-impact products to achieve certification, rather than fully embracing a triple bottom-line approach where people, planet, and profit are all equally prioritised in their business model,' Dr Hewitt said. 'This suggests that a brand can maintain a profit-maximising, high-volume, low-cost model, typical of fast fashion, while still receiving the same accreditation as brands that genuinely embed sustainable and ethical practices across all areas of their business.' While Princess Polly earnt a score that qualified it for the certification, Dr Hewitt argued that companies that 'meet the minimal benchmark receive the same accreditation as those with much higher scores'. 'They are essentially being treated the same as brands with limited or questionable commitments to sustainable and ethical practices,' he said. 'When a fast-fashion brand like Princess Polly receives the same certification as these more committed brands, it undermines the value of their hard work and dedication to truly sustainable and ethical practices.' Dr Hewitt told NewsWire the certification 'raises alarm bells', arguing it would only add confusion to consumers who were seeking out more sustainable options. 'There is already a lot of confusion among consumers, and making sustainable purchasing decisions is hindered by the growing presence of greenwashing found throughout the sector,' he said. 'Third-party accreditations can help reduce confusion and even scepticism by providing a clear signal of trustworthiness without the need for detailed explanations. 'However, if certifications like B Corp are found to be certifying brands with questionable sustainable practices, consumer trust will ultimately be undermined, leading to even greater confusion as to how to shop sustainable fashion.' In April 2025, B Lab introduced a new set of standards for its certification that Dr Hewitt hoped would 'make it more difficult to obtain certification in the future'. 'This may mean that Princess Polly benefited by receiving certification before these changes were implemented, and they won't need to reapply until 2028,' he said. Speaking to NewsWire, a Princess Polly spokesperson said the fashion brand was 'proud' of its B Corp certification and said the 'decision to pursue B Corp certification stems from wanting to be part of a community that recognises and enables progress and change makers'. 'As a brand built for the next generation, we're proud to be taking bold steps to drive meaningful change at scale,' they told NewsWire. 'Princess Polly was the second Australian fashion retailer with near- and long-term carbon reduction targets approved by the Science Based Targets initiative.' The spokesperson said the brand 'outperformed the industry average' for its emissions, scoring a B grade by the Carbon Disclosure Project in 2024. The spokesperson also argued the brand's garments were 'not cheaply made or priced'. 'We have made significant progress converting a large portion of our range into lower environmental impact materials and will continue growing this number,' they said. They said Princess Polly manufactured 37 per cent of its products this year from 'certified lower-impact materials' and was placed in the top 20 per cent of companies in the 2024 Baptist World Aid Ethical Fashion Guide. 'We make our initiatives publicly available, we are proud of the progress we've made and remain committed to continually advancing our ESG (environmental, social and governance) efforts,' they said. A B Lab spokesperson said the Gold Coast brand had undergone a 'two-year process to measure itself against these standards and took the necessary steps to improve and meet the certification requirements'. 'Some of the ways Princess Polly achieved certification included increasing the use of certified lower-impact materials, implementing stringent testing to ensure durability, actively reducing carbon emissions across its supply chain, promoting circularity, and supporting employees' wellness during family planning and parenting,' they said. 'Princess Polly, like all B Corps with recertification dates in 2028, will be expected to recertify under the new standards to maintain their certification.'
