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Fewer senior execs received pay rises last year
A new national report has found that many chief executives, board directors and senior managers are not immune from salary stagnation in the age of COVID-19.
Lauren Croft
Aon and the Governance Institute of Australia have collaborated on the board remuneration report, which is a comprehensive analysis that gathered insights from 413 organisations.
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Released this week, the Aon and Governance Institute of Australia Board and Executive Remuneration Report 2021 found that fewer CEOs received increases in fixed remuneration in the last 12 months, with only 25 per cent receiving pay rises compared to 53 per cent the previous year. For those who did receive an increase, it was, on average, 0.6 per cent less than previous years.
Bonuses were also harder to secure with a 10 per cent fall in the number of ASX 300 receiving some form of short-term incentive in the last 12 months – a fall from 74 per cent to 64 per cent. In addition, 21 per cent of companies provided salary increases to non-executive directors this year, compared to 28 per cent last year. Approximately one-third of senior executives received increases in fixed remuneration, with an average increase for those executives of 1.9 per cent.
Governance Institute of Australia CEO Megan Motto said the report provides important insights into the state of the economy.
“Australia is currently in a period of low wages growth and it’s clear senior executives and board directors are not immune from this,” she said.
“Across the board, we are not seeing many – if any – meaningful salary increases.”
Ms Motto added that, from a governance perspective, there is also a strong reputation risk attached to boosting CEO and director pay during times of economic uncertainty.
“Against the backdrop of the last 12 months, companies must think carefully about the reputational impact of increases for executives and directors. When so many in the community face economic uncertainty, people want to see the ‘pain’ spread evenly,” she said.
Aon’s principal of rewards solutions, Dawson Wang said that the lack of salary increases across the board was driven by uncertainty.
“The data suggests that within the ASX300 and the surveyed participants the remuneration environment for both executives and non-executive directors can be best described as stagnant,” he said.
“It seems that uncertainty driven by COVID-19 at the beginning of the 2020-2021 financial year led many companies to hold salaries at current levels or defer the timing of the increase.
“It will be interesting to see the flow-on effect and impact on executive movement as the economy continues to rise above pre-pandemic levels and confidence returns.”
