Domino’s Pizza’s Don Meij has risen to become Australia’s highest paid chief executive taking home $36.84 million last year, passing perennial performers, Westfield’s Peter and Steven Lowy on a combined $25.9 million, and Macquarie’s Nicholas Moore on $25.19 million.
Chief executive pay is back to pre-financial crisis levels, excluding any adjustment for inflation or shareholder returns, the Australian Council of Superannuation Investors analysis reveals.
Median realised or take-home pay for the top 100 CEOs is up 12.4 per cent to $4.36 million, and bonus payments are up more than 18 per cent, despite median fixed pay falling by 1.1 per cent to $1.77 million.
ACSI, which advises industry super funds how to vote at AGM season, said that a top 100 CEO was more likely to lose their job than to miss their bonus.
Only six top 100 CEOs who were eligible missed out on a bonus, including Mr Meij and Commonwealth Bank’s Ian Narev, who was among 10 departing CEOs.
The big four bank chiefs tumbled out of the 10 highest paid CEOs for the first time on record, as boards put a greater proportion of CEO pay into equity, which investors have long called for, and into bonuses with the median bonus 70.5 per cent of the maximum available.
“We will be looking closely at bonus outcomes in the upcoming reporting season,” ACSI chief executive Louise Davidson said.
“If they’re not transparent and reflective of performance, we will be recommending that our members vote against those remuneration reports.”
Push for UK-style pay clamps
Ms Davidson said unless bonuses were curbed, funds would call for legislation.
“It’s a sad state of affairs when bonuses have become such a sure thing. If this issue is not addressed voluntarily, we may need legislative intervention to give shareholders a greater say – such as we have seen in other markets, like the United Kingdom,” Ms Davidson said.
The ACSI report highlights the often huge disparity between reported pay (which companies are required to disclose and includes the accounting value of shares and equity in the year they are granted) and take-home or realised pay, which shows the value of shares and equity in the year they are received.
For example, Mr Meij’s take-home pay of $36.84 million was almost eight times his reported pay of $4.66 million.
Mr Meij acquired 900,000 shares on the exercise of $15.81 million worth of options, which he sold for a total of $53.11 million to “fund option exercises, tax liabilities from his options and a divorce settlement” last year.
Bank CEOs lose out
Domino’s share price has fallen from well over $70 two years ago to less than $50 this year – a 37 per cent fall – and Mr Meij missed any annual bonus.
However, the share price is still significantly up from just over $10 five years ago – up 374 per cent delivering exceptional returns for shareholders.
Westpac’s Brian Hartzer – last year’s highest paid bank chief – ranked 20th on reported pay with $6.68 million and 33rd on realised pay with $5.28 million.
Qantas CEO Alan Joyce’s latest $25 million pay packet would also put him among our highest paid CEOs this year.
Four CEOs have been included in the ASX100 top 10 realised pay list for the four years that take-home pay has been collected – Ramsay Health Care’s Chris Rex, the Lowy brothers, Macquarie CEO Nicholas Moore and James Hardie’s Louis Gries, collecting a total of $341 million over the four years.
Mr Rex, Mr Gries and Mr Moore have each presided over total shareholder returns (TSR) over the four-year period of well over 110 per cent, compared to TSR across the ASX200 up around 12 per cent during the 2017 financial year.
Pay for performance
Based on reported pay, Mr Rex, the Lowy brothers and Macquarie’s Mr Moore took the top three spots on $25.6 million, $21.4 million and $18.71 million respectively.
“The highest paid CEOs delivered very high TSR and vice versa, shareholders benefit, so do CEOs,” pay expert Michael Robinson from Guerdon Associates said.
The six CEOs who received no bonus for performance reasons in the 2017 financial year were CBA’s Mr Narev, Tabcorp’s David Attenborough, Star Entertainment’s Matt Bekier, Adelaide Brighton’s Martin Brydon, Vocus’ Geoff Horth and Domino’s Mr Meij.
Only Mr Attenborough, Mr Bekier and Mr Meij remain in their roles and ACSI said this a longstanding trend whereby no bonus payment to a CEO is a lead indicator of impending CEO turnover.