CEO & CFO Fixed Remuneration in Perspective

The graphs below highlight the variability in Chief Executive (CEO) and Chief Financial Officer (CFO) median fixed remuneration for the ASX top 300 companies (at 31 December 2015) using the median rate of increase.  These statistics are compared with: average weekly earnings (AWE); the Consumer Price Index (CPI); and movements in relative share price indices addressing the top 100 companies, the top 200 companies and the top 300 companies.

Top 100 – CEO & CFO Median Fixed Remuneration Adjustments

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For the top 100 companies, the analysis reveals that CEO pay has increased at a rate below that of the CPI and average weekly earnings and well below movement in the share price index for the top 100 companies.

CFO pay, on the other hand, has increased at a more rapid rate though the rate of increase has declined over the period from 2014 to 2015.

Top 200 – CEO & CFO Median Fixed Remuneration Adjustments

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Top 300 – CEO & CFO Median Fixed Remuneration Adjustments

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For the top 200 and top 300 companies the median increase in fixed remuneration for CEOs declined from 2012-13, despite an uplift in CFO fixed remuneration. The rate of increase for CEO pay was more in line with CFO pay for the 2014-2015 period.

Across all sectors, a proportion of up to 20% of CEOs have been replaced by new incumbents, where in the vast majority of instances fixed pay has been less than a long serving predecessor CEO or CFO.  The significant uplift in CFO remuneration may also reflect the increased demands being placed on these positions relative to the CEO and what has traditionally been a significant gap in pay between the CEO and the top 3 Executives in many of Australia’s leading companies.

Egan Associates is increasingly observing that Executives occupying the position of CFO, particularly among Australia’s leading companies, have a broad base of experience where their career has not solely followed a path from graduate accountant through the specialist accounting functions to that of Financial Controller and onto Chief Financial Officer.

While the trend for CFO reward adjustment has remained consistent, in our judgement it primarily reflects replacement. In top 100 companies the tapering off of the rate of increase from the 2014 Financial Year through to date reflects fickle global bourses and challenging economic environments across a number of industries.

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