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Executive pay rising, will likely continue to do so
A new report details the extent to which pay for senior executives, board members and chief executives is increasing, and the number of organisations in Australia that expect to pay more moving forward.
Jerome Doraisamy
Governance Institute, in conjunction with Aon, has released the 2022 Board & Executive Remuneration Report, the third such account of pay levels for those at the top in 528 organisations across Australia, including 293 ASX 300 companies.
Highlights from the report include:
- The average annual increase to senior executives’ pay packets ranged between 1.7 per cent (fixed remuneration) and 3.2 per cent (total remuneration);
- Fixed pay for chief executives climbed by just 1.1 per cent from the previous year;
- Board members saw an increase of 8.8 per cent in their pay;
- Chairmen saw a 10.7 per cent increase to their remuneration;
- Three in five (60 per cent of organisations believe that executive pay will be boosted in the next year;
- Three in four (74 per cent) of organisations take into account shareholder and community expectations when deciding pay for their company heads (showcasing the growing influence of ESG considerations); and
- One in four (27 per cent) not-for-profit organisations reported that more than 50 per cent of their directors are female, compared to just 18 per cent of all organisations across the market.
Reflecting on the results, Governance Institute of Australia chief executive Megan Motto said the executive pay market seems to be in a state of subdued catch-up after a sluggish year in 2021.
“Last year there were very few meaningful salary increases and it’s clear that low wage growth remains,” she said.
“But with almost 60 per cent of the organisations expecting to boost executive pay in the next 12 months, it seems some optimism is returning.
“And as the war for talent continues, there may be some further pressure on salaries.
“Getting the right person for these top jobs [is] critical and remuneration is a key factor for candidates.”
Aon head of executive compensation Zoe Lockyer added that the report provides an important snapshot of remuneration trends which in turn reflects the complex prevailing market sentiment, driven by uncertainty and increasing volatility in many areas.
“Currently we are seeing multiple domestic interest rate increases, skill shortages, supply chain issues, global political instability, low immigration and ongoing disruptions from COVID-19 having an impact on the focus in boardrooms on remuneration,” she said.
“Organisations are finding they must balance these external pressures with sustaining a committed, high performing and well-remunerated workforce. While the great resignation hasn’t played out as predicted, building a resilient workforce and rewarding employees includes a strong remuneration program.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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