Australia’s CEOs earn more than they admit

James Fernyhough
Sep 03, 2015, updated Sep 03, 2015

Some of our CEOs can afford even more of these chaps than we thought.

The 10 highest-paid CEOs of Australia’s biggest 100 companies collectively earned a massive $171 million in 2014.

That’s equivalent to the combined earnings of 2137 Australians on the average income of $80,000. But you wouldn’t get that figure by reading the companies’ annual reports.

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According to research by Australian Council of Superannuation Investors, many ASX-listed companies under-report the amount they pay their CEOs.

Based on the companies’ own statutory reporting, the top 10 CEOs’ earnings totalled $99.63 million in 2014. But when you include other, less obvious forms of remuneration, ACSI said the total value of remuneration jumped to $171.4 million. (And only one was a woman, and she has since been replaced by a man.)

Some of our CEOs can afford even more of these chaps than we thought.

Taking into account these additional elements, the highest-paid Australian chief executive in 2014 was Ramsay Health Care’s Chris Rex, who ACSI said earned a staggering $30.8 million.

That was more than three times the figure reported – $9.1 million.

Number two on the list were brothers Peter and Steven Lowy, joint CEOs of Westfield and son of the shopping centre chain’s chair Frank Lowy. Together they took home $24.5 million, which was $2 million more than reported.

The top 10 companies included health care, banks, mining companies, insurance companies and real estate firms.

One of the worst under-reporters was SEEK, whose CEO Andrew Bassat earned more than four times as much as the reported figure of $4.2 million.

James Hardie’s CEO earned almost twice as much as reported – $20.8 million – while Colin Goldschmidt of Sonic Healthcare earned $13.4 million, not the $3.8 million reported.

“These figures suggest that the existing requirements for reporting executive pay may significantly understate the rewards received in a given year. Statutory reporting is, perhaps, disclosing only the tip of the iceberg in terms of the wealth accruing to senior executives,” said ACSI chief executive Louise Davidson.

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“While the packaging and disclosure of CEO pay has undoubtedly become more disciplined in recent years, thanks to legislation like ‘two strikes’ and termination pay – as well as challenging scrutiny from ACSI and others – company investors and owners cannot afford to lose sight of the quantum of reward being delivered.”

The yacht test

A $30 million annual salary is so huge it is hard to visualise. So we thought we’d make it easier to comprehend by seeing how many luxury yachts each of our CEOs could have bought with their earnings.

We trawled through the internet to find a yacht that was suitably luxurious. We settled on a $4.4 million beast, not dissimilar to those pictured above.

To get a bit of perspective, we compared the CEOs’ salaries with the salaries of someone who might work for the company they run, and tested how many yachts the latter could afford as well.

Here are the results.