CEOs better off
By Leon Gettler | theage.com.au | 14 March
Macquarie Bank chief executive Allan Moss is always held up as Exhibit A in the debate about the chasm between ordinary wage earners, who are being urged to show restraint, and excesses for executives.
But he is not Robinson Crusoe. A study shows that the mean total pay of chief executive officers of the top listed 100 companies, has increased 72% since 2001.
According to the study, commissioned by the Australian Council of Super Investors and conducted by RiskMetrics (formerly ISS Australia), fixed pay for bosses has doubled over the past five years, up 102%. That was four times the rise in the fixed pay of ordinary wage earners during the same period.
The increase in base pay also outpaced returns to shareholders over the same period. In the five years to June 30, 2006, the S&P/ASX 100 Index rose 76.8%.
The 10 best-paid CEOs were Mr Moss ($21.2 million), Babcock & Brown's Phillip Green ($17 million), Westfield's Frank Lowy ($14.38 million), Leighton's Wal King ($11.16 million), former Woolworths chief Roger Corbett ($10.77 million), former BHP Billiton chief Chip Goodyear ($8.92 million), Telstra's Sol Trujillo ($8.71 million), former Brambles chief David Turner ($8.53 million), Westpac's David Morgan ($8.4 million) and NAB's John Stewart ($8.4 million).
The data in the study is in contrast to the money earned by ordinary wage earners. According to the latest Bureau of Statistics data, average weekly earnings rose 1% in the three months to August. In the year to August 2007, full-time earnings rose 5.2% for males and 4.8% for females.
Compared with 2005, average CEO base pay in 2006 rose 18.2% while average annual bonuses were up 21.4%. Total CEO pay, including the value of options, was up 21% and total CEO cash pay, excluding options and other long-term incentives was up 21.8%.
The CEO of a top 100 company is also more likely to receive a bigger annual bonus. Back in 2001, the average bonus was $769,125, but five years later, CEOs were picking up an average sweetener of $1,665,805.
Even more striking is the growth in bonuses. Five years ago, the biggest bonus was $6,239,739. This was a pittance compared with the biggest of $15,833,577 in 2006.
Back in 2002, one in four CEOs did not receive a bonus.
In 2006, that applied to only four of the 74 CEOs - at ABC Learning Centres, Harvey-Norman Holdings, Futuris and Multiplex - covered in the study.
In just about all cases, bonuses are paid in cash.
First published by TheAge.com.au on March 14 2008
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