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CEO pay vs company performance: We’ve crunched the numbers

The five highest-paid CEOs in Australia each reported pay packets over $10 million, with all but one seemingly scoring a healthy raise during the year.
The five highest-paid CEOs in Australia each reported pay packets over $10 million, with all but one seemingly scoring a healthy raise during the year. And although CSL’s Paul Perreault – the nation’s second-highest earning CEO with reported pay of $13.87 million in FY21 – technically recorded a 9% decrease in pay, his actual take-home pay jumped significantly to more than $60 million. But the publication of this data by the Australian Financial Review and OpenData last week begs an important question: did the companies of these high-paid CEOs record similar improvements in performance? Reach Markets has compared increases in these CEOs’ salaries with changes in their companies’ profits and dividend payouts to find out.

Macquarie Group (ASX: MQG)

Topping the CEO salary leaderboard this year was Macquarie Group’s Shemara Wikramanayake, whose reported pay totalled $15.97 million. That pay packet represents a 7% increase on the previous year, helping her knock CSL’s Mr Perreault out of first place.  Notably, a 7% increase is roughly in-line with improvements in Macquarie Group’s profits and dividends for the year too. The company reported a net profit of $3.015 billion last financial year, marking a 10% improvement on FY20, while total ordinary dividends paid for the year climbed by a similar figure: up roughly 9%, to $4.70 per share. 

CSL (ASX: CSL)

CSL CEO Paul Perreault was unique among the top five earners in that his reported pay was the only one to decrease for the year, shrinking 9% to a still sizeable $13.87 million. That decrease is at odds with CSL’s performance during the year – net profits climbed 13% to $2.37 billion, while total dividends increased 9.9% to US$2.22 per share. But reported pay doesn’t tell the whole story here. Mr Perreault’s total take-home pay for FY21 reached closer to $61 million – making it one of the largest pay packets of any CEO in Australian history. That total also eclipsed the $20.7 million take-home pay received by Macquarie’s Ms Wikramanayake.

Goodman Group (ASX: GMG)

Industrial property manager Goodman Group recorded an operating profit of $1.2 billion in the 2021 financial year, up 13.2% on the prior corresponding period. That’s closely aligned with the 12% pay bump its CEO, Gregory Goodman, received during the year, too – pushing his reported pay for FY21 to $11.99 million. Despite both these increases, the company’s dividend remained flat at 30 cents per share.

Newcrest Mining (ASX: NCM)

Newcrest’s CEO, Sandeep Biswas, enjoyed the largest reported pay increase among the five highest-earners, with a 35% raise bringing him to $10.6 million. While an increase of that size can draw the ire of investors – just ask Kogan founder Ruslan Kogan, whose 1413% increase to $8.9 million resulted in a shareholder strike – this increase seems modest compared with the miner’s profit and dividend growth. Newcrest’s statutory profits for the year came in at US$1.164 billion, up 79% on 2020’s US$647 million. Shareholders also saw total dividends grow from US$0.25 per share to US$0.55 – marking a 120% year-on-year increase.

BHP (ASX: BHP)

Rounding out the five highest-paid CEOs is BHP’s Mike Henry, whose reported pay came to $10.08 million – a 22% increase on last year. As with fellow miner Newcrest, this lift seems comparatively modest when placed next to the increases in profits and dividends. In FY21, the company reported profits after tax from continuing operations of US$13.451 billion, up 53.97% from the US$8.736 billion earned the previous year. Total dividends for 2021 came to US$3.01, representing a 150.83% increase from the US$1.20 per share paid out in FY20.
Sources

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