Posted , June 15, 2015.

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 –