[Australia] Central bank boss slams CEO salaries

Philip Lowe - the RBA governor - has spoken out against the towering salaries of Australia’s CEOs after news last week revealing that Alan Joyce - the boss of Qantas - took home $24 million last year, news.com.au reports.

The central bank boss Philip Lowe contrasted the sky-high bonuses of the business community’s elite with the stagnant wage growth Australians workers were experiencing. He also said that wages should be raised by more than 3 per cent.

Financial Review first reported Dr Lowe’s comments which were made during his speech to the Armidale Chamber of Commerce on Tuesday.

“As a regular Australian, it disturbs me,” he reportedly said, “Some people who are paid extraordinarily high amounts of money and working Australians have relatively low wages and getting small wage increases, I think it’s an issue for society.”

The RBA boss’s base salary is $903,000, he said he turned down a performance-based salary structure believing that CEOs should not be rewarded with an incentive for doing their job.

“I’ve got a flat salary and I say to my board, ‘Look, don’t consider performance because you know I’m going to work as hard for you and for the people who show up regardless’. Actually, I think a lot of people are like that,” Dr Lowe said. “I don’t need the incentives. My incentive is to do a good job for the people.”

Analysis from the Australian Council of Superannuation Investors (ACSI) found that in the 2018 financial year Alan Joyce’s $23,876,351 wage was the most of any CEO (link via original reporting). Nicholas Moore - CEO of Macquarie Group - came second with $23.86million and  Michael Clarke of Treasury Wine Estates took home $19,024,334.

In contrast with Australia’s average full-time wage - which the Australian Bureau of Statistics puts at $85,010 - the median pay ASX 100 CEOs earned was $4.5 million. Their median bonus was $1.61 million, which represented the second-highest number in the survey’s 18-year history. In total, in FY18 ten CEOs made more than $10m.

1. Alan Joyce, Qantas Airways: $23,876,351
2. Nicholas Moore, Macquarie Group: $23,855,580
3. Michael Clarke, Treasury Wine Estates: $19,024,334
4. Bob Vassie, St Barbara: $13,246,088
5. Craig Scroggie, Next DC: $12,515,914
6. Sandeep Biswas, Newcrest Mining: $12,083,392
7. Brian Benari, Challenger Group: $11,696,001
8. Raleigh Finlayson, Saracen Mineral Holdings: $11,284,256
9. Andrew Bassat, Seek: $10,744,472
10. Colin Goldschmidt, Sonic Healthcare: $10,017,376

Dr Lowe said, “There is a mindset that says, we have to pay you five or 10 or $20 million so that you deliver value for the company. But that’s the mindset that many businesses have.”  He believes regular Australians would find it hard to understand the staggering figures and called for the broader workforce to have “wage increases that start with a three (per cent)”.

Louise Davidson - ACSI CEO - criticised the country’s “culture of entitlement” among CEOs, following the wage revelation, “The way bonuses are being handed out suggests there is a culture of entitlement whereby supposedly ‘at-risk’ pay is not very risky at all,” she was quoted to say, in a release.

“These payments occurred in a year when the royal commission was in full swing, revealing evidence that executives were not being held accountable for poor conduct, and in the wake of soaring ‘first strike’ votes against remuneration reports.

“Clearly, corporate Australia is not getting the message that bonus payments should be variable and awarded for stretch performance, rather than being fixed pay under another name. This is a failure of both discipline and leadership.”

Sally McManus - the Australian Council of Trade Unions (ACTU) secretary - offered her reaction in a tweet, “Does anyone honestly think one person deserves $24mil/year when staff earn a fraction of this?”