The co-founders of buy now, pay later outfit Afterpay shattered the record for chief executive pay in Australia after taking home $264.2 million last year, as fresh research showed bonuses for top ASX bosses hit a new high in 2021.
The Australian Council of Superannuation Investors (ACSI) on Wednesday published the results of its annual survey of CEO pay for the 2021 financial year, which showed the median realised pay for ASX 100 CEOs rose to $9.15 million in 2021, up from $5.85 million in 2020.
Other highly paid CEOs included CSL chief Paul Perreault ($58.9 million), Macquarie’s top executive Shemara Wikramanayake ($14.7 million) and Woolworths boss Brad Banducci ($11.8 million).
Afterpay co-founders Anthony Eisen and Nick Molnar, set a joint record for realised pay $264.2 million in the 2021 financial year. Credit:Eamon Gallagher
The median realised pay figure was distorted by the Afterpay results. Excluding Afterpay, the average for realised pay was $5.84 million. That is more than 60 times the average full-time earnings of around $90,000, according to the Australian Bureau of Statistics.
The average bonus awarded to an ASX100 chief executives hit a record $2.31 million, exceeding 2017’s record of $2.30 million
ACSI executive manager of stewardship Ed John said there were concerns that while Australian boards responded to COVID with appropriately reduced pay outcomes in 2020, the pendulum swung the other way in the most recent financial year with bonuses hitting “new heights”.
“And really the question is about what happens in the upcoming reporting season. It’s been a difficult time for investors and that scrutiny on bonuses this year during a pretty difficult time in markets,” he said.
“Boards around Australia right now are sitting down to consider how they’ll land on bonus outcomes to June 30 and taking into account the shareholder experience, and the difficulties in markets will be a key challenge.”
Eisen and Molnar took the top spot after they both exercised 1.5 million share options which gave them the right to buy those shares at just $1 when the actual share price of Afterpay was near $90.
The options were awarded and exercised in August 2020, before Afterpay’s massive $39 billion merger with US financial technology giant Square, one of the biggest corporate deals in Australian history.
The previous record for realised pay was CSL’s Perrault, who took home $43 million in 2020.
The Afterpay remuneration figures were reported in the company’s annual report, which noted the options exercised in the 2021 financial year by the co-chief executives “represent legacy one-off equity arrangements”.
“The value delivered from these options is aligned with the value delivered to shareholders over the vesting period. Anthony and Nick remain fully committed to Afterpay and remain the largest shareholders of the group,” the report stated.
Afterpay’s valuation has tumbled this year as the buy now, pay later sector cratered and fell out of favour with investors amid rising interest rates.
ACSI, an adviser to not-for-profit superannuation funds, assesses the value of cash and equity actually received by CEOs to calculate “realised pay” figures, rather than just the accounting valuations reported in annual reports. Chief executives appointed midway through the financial year are excluded from the study.
ACSI’s research also found multi-million dollar bonuses for Australia’s chief executives have returned as companies start to unwind temporary pay cuts introduced during the pandemic.
Qantas chief executive Alan Joyce was the only incumbent ASX100 chief executive to not receive a bonus in either the 2020 or 2021 financial year. He took home $1.98 million. In ACSI’s report for the 2018 financial year, Joyce led the field for chief executive pay.
Qantas has been under fire from travellers for months over issues with delayed or cancelled flights and customer service. The company, which shed thousands of jobs at the start of the COVID-19 pandemic when flights were grounded, has been battling to re-staff its workforce.
John said the report also showed that while cash remuneration had held steady for some years, there has been a greater focus on equity rewards.
“Some of the largest outcomes are the result of equity incentives, particularly where share prices have doubled or tripled over a performance period,” he said.
“Again, you really have to scrutinise each one, because in some cases, investors will see that’s value for money given what’s been delivered … but in other cases, you’ll see very large equity incentives that don’t actually match the shareholder experience.”
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