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Talent and skills shortages are affecting even the highest ranks of leadership within organisations.
The Board and Executive Remuneration Report by the Governance Institute of Australia highlighted how C-suite leaders are experiencing average pay rises more than double the rate of inflation, which is reportedly due to economic and workforce pressures.
Managing directors across ASX-listed companies saw average salary increases of 14 per cent, and managing directors of ASX 200 companies 19 per cent. Meanwhile, chief executives’ wages saw an increase of 15 per cent.
Megan Motto, CEO of the Governance Institute, believes this is a result of the tight labour market, which is causing strain on businesses to fill leadership positions.
“These are significant increases off the back of several years of relatively small rises in fixed pay for executives,” she said.
“With AGM season looming, boards will need to have a strong narrative around their remuneration policies to stand up to shareholder scrutiny and manage reputation risks.”
This isn’t just hearsay, as survey respondents recorded receiving pay rises. In fact, 42 per cent of ASX-listed board directors and 71 per cent of ASX-listed senior executives received a pay rise in the last 12 months.
Similarly, 52 per cent of managing directors at listed companies were eligible for performance bonuses, with the average bonus coming in at 89 per cent. Meanwhile, 51 per cent of listed CEOs saw the same, with an average bonus of 72 per cent.
“Remuneration is a key factor for candidates, and with roles like company secretary now on the skills shortage list, it’s not surprising we’re seeing some really big jumps in base salaries for these positions,” Ms Motto said.
While this is great news for C-suite executives, it begs the question: Is this fair to the rest of the workforce?
The data found that 9 per cent of ASX-listed C-suite executives received an average increase to their fixed remuneration of more than 10 per cent. Receiving much less were the general staff at these companies, with only 3 per cent receiving the same average pay rise.
When you stop to look at the data, the growth of the average employees’ wages isn’t keeping up with the rise in inflation.
According to the Australian Bureau of Statistics (ABS), the Wage Price Index (WPI), which highlights the growth in wages, grew 0.8 per cent in the first quarter of 2023. When you compare this to the consumer price index (CPI), which measures inflation, the first quarter of the year saw an increase of 1.4 per cent.
March 2022–23 saw the WPI climb 3.7 per cent. The CPI, however, increased by 7 per cent.
With the average CEO seeing wage increases of 15 per cent, the disconnect is as strong as ever.
Jack Campbell
Jack is the editor at HR Leader.
