COVID-19 locks down CEO bonuses

Boards rein in bonus payments as the pandemic ravages the economy

COVID-19 locks down CEO bonuses

The pay packets of Australia’s top executives took a big hit last financial year, with boards reining in bonus payments as the COVID-19 pandemic decimated the economy, new figures have revealed.

Nearly a third, or 31%, of chief executives at ASX 100 companies did not receive an annual boost to their base salary in 2020, twice the number in the year prior and the highest in two decades, according to the Australian Council of Superannuation Investors’ latest survey.

The size of the typical performance bonus for CEOs also dropped significantly to 31% of the maximum possible payout, down from 60% in 2019 and the lowest since ASCI started tracking the metric in 2010.

The remuneration cuts helped push down median realised pay – which includes base pay, short-term incentives, and vested shares – for ASX 100 CEOs to slightly below $4m, representing a 3.6% descent.

Louise Davidson, ASCI chief executive, noted how the reduction in CEO bonus contrasted with what happened in the aftermath of the global financial crisis, when incentive payments were typically not adjusted to reflect market performance.

“Remuneration restraint during market turmoil is not a given,” she said. “Just a decade ago, in the shadows of the global financial crisis, executives were being rewarded with bonuses and termination payments, which were in direct contrast to the negative financial outcomes many companies were delivering to shareholders.”

Davidson, however, welcomed the latest survey results, which she said was a sign that boards are listening to investor and community concerns about executive pay.

“Boards largely also rose to the challenge in a COVID-19 environment, to ensure that incentive payouts were truly earned, not just windfalls from being in the right place in troubled times. And sensible discretion was applied to reduce formulaic outcomes,” she said.

Among the ASX 100 CEOs who did not receive bonuses last financial year were Geoff Culbert of Sydney Airports, Alan Joyce of Qantas, and Graham Turner of Flight Centre. The transport and tourism sectors are among the sectors most adversely impacted by the coronavirus pandemic.

Marnie Baker of Bendigo & Adelaide Bank, Woolworth’s Brad Banducci, former AMP boss Francesco De Ferrari, and Susan Lloyd-Hurwitz of Mirvac also missed out on a bonus.

Despite the trend, some top executives still enjoyed record-breaking pay. Paul Perreault of healthcare giant CSL, the manufacturer of the AstraZeneca vaccine, took home $43m in bonus payout, marking the first time CEO pay breached $40m. Total shareholder returns at the company surged 35% in 2020.

Bill Beament of Northern Star ($31.7m), Greg Goodman of Goodman Group ($26.8m), Shemara Wikramanayake of Macquarie Group ($16.4m), and Jake Klein of Evolution Mining ($15.8m) rounded up the top five highest-paid bosses on a realised-pay basis last financial year.

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