MENU

Top paid CEOs – nice work if you can get it!

The Australian Council of Super Investors (ACSI) has released its annual research paper titled “CEO Pay in the Top 200 Companies” for 2012. The study was commissioned by ACSI and prepared by Ownership Matters and makes for interesting reading.

The averages

  • In 2012, the average fixed pay of a top 100 CEO fell 2.4% to $1.9 million.
  • In 2012, the average bonus paid to top 100 CEOs increased by 4.8% to $1.315 million with 82% of CEOs receiving a bonus.
  • Cash pay remained high in 2012. Of the total fixed and bonus pay, the average cash payment received by a top 100 CEO was close to $3 million.

The winners

  • Brothers Peter Lowy and Steven Lowy, co-CEOs of Westfield Group (ASX: WDC), were grouped together as one for the study. Together they received statutory pay of $21 million.
  • Coming through in second place was ANZ Bank (ASX: ANZ) CEO Mike Smith with $9.7 million in statutory pay.
  • Next up was Gail Kelly who received $9.6 million in statutory pay as CEO of Westpac Bank (ASX: WBC).
  • In fourth spot was now-retired CEO of global mining giant BHP Billiton (ASX: BHP) Marius Kloppers, who received statutory pay of $9.5 million.
  • Rounding out the top five highest paid CEOs was Louis Gries from James Hardie Industries (ASX: JHX), who received statutory pay of $9 million.

While most employees can only dream of earning these kinds of salaries, there was at least some degree of conservatism in 2012. The study did find that “average CEO fixed pay in Top 100 companies fell for only the second time in eleven years. Increased investor engagement combined with the introduction of the ‘two strikes’ rule have no doubt played their part in these results.”

Foolish takeaway

While having CEO pay out in the open provides clarity and insight for investors, it is also partially responsible for CEO pay being set in relation to a peer group. This unfortunately has led to a march upwards in CEO pay as salaries shuffle towards the highest paid.

One of the most disturbing finding from the study was that “a large component of statutory pay is paid irrespective of performance.” While the seemingly enormous level of pay in itself is alarming for many shareholders, the possibility that a large portion is not even linked to performance or to the creation of shareholder value is even more alarming and reinforces why investors should pay close attention to the managers running their companies.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.