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Are ASX CEOs worth their weight in share price growth?

Qantas Airways Ltd (ASX: QAN) CEO Alan Joyce has topped the list of Aussie CEO earners for FY18, taking home a tidy $23.88 million last year.

According to the annual survey by the Australian Council of Superannuation Investors (ACSI), 75 of the 76 ASX 100 CEOs who were eligible for a bonus, received one – all but Domino’s Pizza Enterprises Ltd (ASX: DMP) CEO Don Meij.

Mr Joyce edged out then Macquarie Group Ltd (ASX: MQG) CEO Nicholas Moore and Treasury Wine Estates Ltd (ASX: TWE) boss Michael Clarke, who each took home $23.86 million and $19.02 million, respectively.

Did the ASX CEOs earn their pay in FY18?

Over the course of Qantas’ financial year from 1 July 2018 to 30 June 2019, the Qantas share price fell 12.34% lower, excluding distributions.

However, much of Alan Joyce’s compensation package was tied to Qantas stock or stock option bonuses, which were awarded at around $1.20 per share and vested throughout the year around the $6 per share mark.

It’s difficult to compare apples to apples in terms of financial performance, particularly given some companies like Macquarie have a financial year ending in March.

From 1 April 2018 to 31 March 2019, the Macquarie share price climbed 26.27%, which, while solid, didn’t exactly set the investment world on fire compared to the likes of Afterpay Touch Group Ltd (ASX: APT).

However, since Nicholas Moore took the reigns at Macquarie on 24 May 2008 amid the GFC through to his retirement in November 2018, the Macquarie share price more than doubled – even before accounting for dividends.

Are ASX 100 CEOs overpaid?

This is really a question as old as markets and financial performance itself, and there is no clearcut answer.

While Mr Joyce’s payment came in at 285 times the annual average full-time wage in FY18, the reality is that the structure of these compensation packages are complicated and delivered over many years.

CEOs take big career risks taking on these types of high-profile positions and require compensation for that risk, which often involves controversial golden handshakes and stock grants.

I’m not sure if these CEOs are overpaid, and there are certainly shareholders out there who would be happy to pay handsomely for leaders who can deliver billions of dollars in value for their companies at a price of just over $20 million.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Treasury Wine Estates Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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