CEOs and managing directors given payrises in inflation crisis

Top executives have had their pay increased much higher than the average Australian amid the cost of living crisis, a new report shows.

The nation’s top executives have received pay rises much higher than the rate of inflation as everyday Australians battle the cost of living crisis.

A new report from the Governance Institute of Australia has found senior executives in Australia’s largest listed companies were given pay rises double the rate of inflation.

The base salaries of managing directors across companies listed on the ASX rose by an average of 14 per cent, while chief executive salaries rose by 15 per cent, according to the latest annual Board & Executive Remuneration Report.

Taking the helm at Qantas after Alan Joyce, who was given a base pay of $2.15m in 2021-22, new chief executive Vanessa Hudson will earn a base of $1.6m. She will be eligible for bonuses worth millions more, as Mr Joyce was. Picture: NCA NewsWire / Gaye Gerard

Managing directors of ASX 200 companies involved in the survey saw an average fixed pay increase of 19 per cent while wages for the average Australian rose by just 3.6 per cent in the past year.

Seven in ten ASX listed senior executives (71 per cent) received a pay rise in the last 12 months.

Not only did base pay increase, but 52 per cent of listed company managing directors were eligible for a performance bonus, with the average maximum bonus being 89 per cent of their base salary.

That was the same for chief executives, with 51 per cent eligible for an average maximum bonus of 72 per cent of their salary.

Chief executives earned an average of $339,084 in the past year while managing directors took home an average of $633,302.

Australia’s median personal income in 2019-20 (latest figures) was $54,338.

The top earning managing director received $2,502,00 in pay.

The figures are a reflection of a tight labour market and that the cost of living is “playing out at the executive level”, according to Governance Institute chief executive Megan Motto.

The average Australian took home $1,805.90 per week in November 2022. Picture: NCA NewsWire / Dan Peled

“These are significant increases off the back of several years of relatively small rises in fixed pay for executives,” Ms Motto said.

“With AGM season looming, boards will need to have a strong narrative around their remuneration policies to stand up to shareholder scrutiny and manage reputation risks.”

Inflation rose by 7.0 per cent in the year leading to the March quarter, with essential costs leading the spike in costs.

The cost of housing rose by 9.8 per cent in the past year while food rose by 8.0 per cent. .

Originally published as CEOs and managing directors given payrises in inflation crisis