How do we rebuild shareholder trust on executive pay

A look in the rear-vision mirror:
ASX 100 remuneration in 2009
Total remuneration and mix
The total remuneration levels (see Figure 16) of
CEOs, CFOs and other disclosed executives within
ASX 100 companies have not changed dramatically
at the median in the last year, with a slight decrease
in total remuneration for CEOs, and no change for
CFOs and other executives.
Breaking total remuneration into the various
components shows an interesting picture. Fixed pay
at the median of the ASX 100 for CEOs, CFOs and
other executives increased slightly, but the median
short-term incentives paid decreased significantly as
the impact of the GFC set in. Long-term incentives
valued at grant increased for CFOs and other
executives, but decreased slightly for CEOs. This
may have been due to an increase in scrutiny of CEO
remuneration practices by various stakeholders.
A look at the remuneration mix at the median of the
ASX 100 further confirms the reduction in STI value
as percentage of the total remuneration mix (see
Figure 17).
The level of total remuneration continues to have a
high correlation with market capitalisation, even with
significant swings in company share prices over the
past 12 months (see Figure 18).
Figure 16: ASX 100 CEO, CFO and Executive total remuneration levels
$,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
CEO CFO Execs CEO CFO Execs
Median
75th
Fixed pay Actual STI LTI at grant
Figure 17: ASX 100 CEO, CFO and Executive remuneration mix – 2008 and 2009
CEO
2009
2008
39%
35%
26%
24%
37%
39%
CFO
2009
2008
47%
44%
20%
27%
33%
29%
Other
Execs
2009
2008
48%
45%
19%
24%
33%
31%
Fixed pay Actual STI LTI at grant
Figure 18: ASX 100 CEO median remuneration levels by company size (market capitalisation)
7,500
6,000
$,000
4,500
3,000
1,500
0
ASX1-25 ASX26-50 ASX51-100
Fixed pay Fixed + STI Fixed + STI + LTI
PricewaterhouseCoopers Executive Remuneration – Fourth Edition 2010 | 41