COVID-19 hits CEO pay as boards rein in bonuses

A record share of Australian chief executives missed out on a bonus last year, as boards responded to the COVID-19 crisis by cutting CEOs’ multimillion-dollar pay packets, new figures show.

The Australian Council of Superannuation Investors (ACSI), a powerful advisory group that compiled the figures, welcomed the trend as a sign boards are listening to shareholder and community concerns about executive pay.

But the council, which has long criticised boards for handing out CEO bonuses too easily, says a key test will be whether the restraint on executive pay continues in years to come.

ACSI’s annual survey of CEO pay, to be published on Tuesday, says 31 per cent of chief executives in the ASX 100 received no performance bonus in 2020. This was the highest proportion in the 20 years of the study, and up from 15 per cent a year earlier.

The size of the typical CEO bonus also fell sharply to a record low of 31 per cent of the maximum, down from 60 per cent in the 2019 financial year.

Despite the trend, there were still some CEOs enjoying record-breaking pay. The highest paid was the chief of blood plasma giant CSL Paul Perreault, who made $43 million in realised pay, the first time in ACSI’s study that an Australian CEO’s pay has topped $40 million.

Even so, ACSI’s executive manager of governance, engagement and policy, Ed John, said the statistics suggested boards were responding to investor concerns. The cuts to bonuses stood in contrast to the global financial crisis, when many executives pocketed big bonuses despite overseeing poor returns for shareholders.

“Today boards are more aware, they are listening to shareholders and they are acting,” Mr John said.