Australian CEOs and other executives given double-digit pay rises amid cost-of-living crisis

Senior executives at some of Australia’s biggest companies recorded double-digit pay rises over the past 12 months, far outpacing pay rises awarded to the rest of the workforce.

The pay rises far exceeded inflation during a time when many business leaders have called for wage restraint.

Chief executive salaries rose by an average of 14% in the past financial year, according to the latest annual report from the Governance Institute of Australia.

Managing directors received an 11% pay rise, a survey of 1,089 companies across the public, private and not-for-profit sectors showed.

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The institute’s survey found general staff working at listed companies received average fixed pay increases of about 5% over the past 12 months.

The average fixed remuneration of a CEO at an ASX200 listed company was $1.37m this financial year, up from $1.14m in 2022-23. Some executives at large listed companies earned much more than the published fixed salaries – with bonuses often doubling take-home pay.

The Governance Institute CEO, Megan Motto, said executives were being compensated for delivering investor returns, boosted by a stock market trading near record levels.

“Executives are clearly being compensated for delivering profits and returns for shareholders and are making the most of a competitive market for top talent,” Motto said on Wednesday.

“Against the backdrop of the cost of living crisis, and with so many doing it tough, it might be hard for some to stomach these figures on an individual basis.”

Companies tend to rely on consultant benchmarking when devising executive pay increases and argue they risk losing talent in a tight labour market if they get their settings wrong.

“We have also seen increased shareholder and investor scrutiny of executive pay in the past 12 months, which is likely to continue if companies aren’t able to justify such substantial remuneration increases,” Motto said.

The sharp rise in executive pay comes despite inflation falling from highs of about 7% to 3.6% in the past year. The minimum wage will increase by 3.75% from July, which means Australia’s lowest-paid workers will earn $24.10 per hour.

Many business groups were vocal earlier this year when calling for wage restraint for minimum earners, citing inflation concerns, but refused to disclose their own executive pay plans.

Recent labour force data showed there are a record number of Australians working multiple jobs as many workers struggle to meet cost-of-living pressures.