Top dollars dropping
Pay packets for chiefs at Australia's top-100 listed companies are at a decade low.
A new survey from the Australian Council of Superannuation Investors' (ACSI) shows chief executive pay packets are down by 3.3 per cent to an average of $1.9 million in 2015.
The stats show most long-standing CEOs have not taken a pay cut, but new chiefs are being hired at lower salaries.
ACSI chief Louise Davidson says firms appear to be responding to the introduction of the “two-strikes” law in 2011.
The new law means that if 25 per cent of shareholders reject a company's remuneration report two years in a row, investors are allowed to force a board spill.
“We think that the two-strikes legislation has led to a much higher level of accountability between companies and their shareholders,” Ms Davidson told reporters.
“For example, in our own practice, we have found that companies are much keener to talk to us before their AGMs, before they actually publish their remuneration, to make sure that shareholders are not going to be unhappy with the remuneration they're proposing for their CEOs.”
Similar studies in countries that do not have such legislation suggest CEO pay packets continue to rise.
But the pay cut could be covered by a rise in bonuses.
The Australian report showed 93 per cent of ASX 100 chief executives received a bonus last year, earning an average of 76 per cent of the possible maximum amount on offer.
“Our concern is that bonus hurdles are not high enough to justify them being called bonuses,” Ms Davidson said.
“So we're really saying; ‘What sort of expectations are being set by companies if CEOs are able to routinely earn 76 per cent of their bonus potential?’.”