Preparing next years budget – here is a useful guideline to Executive Salary Trends
A detailed analysis of listed company annual reports for each year since 2011 has revealed a number of unusual oscillations in executive remuneration. Included below are the 3-year trends in the median annual increases. Additional data is also shown for smaller companies (eg. up to $400M in market capitalisation, and up to $200M in annual revenue) which dominate the Australian market data.
Chief Executive Officer
| Measure | Overall Trend | Smaller Companies | Comments |
| Fixed Remuneration Package: | Median zero change last year; however, the 3-year trend increase is +4% pa. | Median zero change last year; trend increase is +1% pa | Inconsistent rises since 2011; variations by industry & company size are broad |
| Short Term Incentives (annual bonuses actually paid, not the target payment): | Median up +8% last year; however, trend increase of only +1% pa; prevalence unchanged at 60-70% | Median up +8% last year; trend increase is also +8%; prevalence around 60% | Ongoing higher STI payments in smaller companies are becoming the substitute for stagnant FRP |
| Total Annual Remuneration (the sum of FRP and STI payments): | Median up +7% last year; trend increase is +4% pa | Median up +4% last year; however, trend shows zero change | TAR levels are volatile – market TAR alignment is more deliberate in larger companies |
| Long Term Incentives (values reported): | Median jump of +17% last year; however, trend decrease of -3% pa; overall prevalence above 60% | Median jump of +17% last year; however, trend decrease of -4% pa; prevalence 50-60% | Median value is over 80% of the median STI payment; LTI practices and reported values still highly variable |
Other Senior Executives
| Measure | Overall Trend | Smaller Companies | Comments |
| Fixed Remuneration Package: | Median zero change last year; however, trend increase is +2% pa. | Median zero change last year; trend increase is +3% pa | Similar to the CEO, but less variations by industry & company size |
| Short Term Incentives (annual bonuses actually paid, not the target payment): | Median up +11% last year; but trend increase of only +1% pa; prevalence 65-70% | Median also up +11% last year; trend increase is +5%; prevalence around 55-60% | Similar to the CEO, but even greater STI payments are substitutes for FRP |
| Total Annual Remuneration (the sum of FRP and STI payments): | Median up +4% last year; trend increase of +2% pa | Median up +2% last year; trend increase is +3% | TAR levels are less volatile than CEO |
| Long Term Incentives (values reported): | Median jump of +28% last year; trend increase of +13% pa; overall prevalence above 65% | Median jump of +32% last year; trend increase of +16% pa; prevalence 55-60% | Median LTI value for CFOs is now 80% of their median STI payment; other executives have lower a median of 55-60%; nevertheless, LTI prevalence is consistent and reported values still highly volatile |
*FRP: Fixed Remuneration Package
*TAR: Total Annual Remuneration
– This information has been prepared by our Alliance Partner; Simon Hare from HaRe Group –