Odgers Observations: Key Trends in CEO Remuneration

Substantial salary growth

At Odgers, we have witnessed an upward trend in executive pay across ASX-listed companies over the last year, driven largely by performance bonuses, whilst fixed pay has remained relatively stable for ASX 100 CEO’s.

This reflects the Board’s recognition of CEOs who navigate challenging markets and sustain growth while delivering on core projects, such as successful digital transformation.

Talent scarcity and skills shortages in some sectors have also created a catalyst for growth, and CEO salaries continue to vary significantly across industries. The Resources and Energy, Financial Services, and Healthcare sectors generally offer the highest total remuneration packages, primarily driven by performance-based bonuses and company size.

Many of the highest-paid CEOs lead Australian-listed companies with large international operations, and their pay often reflects global benchmarks that are generally higher than those in Australia alone.

Domestic vs International Comparison

CEO remuneration in Australia remains relatively restrained when benchmarked against international markets. Australia’s ‘two-strikes’ rule, under which boards face re-election if remuneration reports are twice rejected, helps maintain CEO salary caps compared to the US or the UK. Compensation strategies to attract international candidates must bridge local and global norms, such as structured LTI schemes. As salary increases for top-tier executives remain tempered in large organisations, firms need to highlight non-monetary incentives and performance-linked upside to maintain appeal and attract the highest-performing candidates.

Realised vs Statutory Trends

There is a clear divergence between what is reported as statutory remuneration and what executives realise as take-home pay in any given year. The Healthcare and Materials sectors stand out for having the largest gap between statutory and realised remuneration, often driven by large LTI vesting events, typically linked to share price outperformance, milestone achievements, or commodity cycles. These trends underscore the importance of clear communication with stakeholders. The gap between realised and statutory remuneration is a function of both accounting treatment and the timing of incentive outcomes. Boards must be prepared to explain years in which realised pay spikes occur due to exceptional performance or vesting events.

Boards and investors are vigilant

Shareholder and investor scrutiny of executive pay has intensified and is expected to continue, particularly where remuneration growth outpaces broader economic conditions. Compensation must be clearly aligned with long-term value creation. Board scrutiny is increasingly focused on curbing ‘golden parachutes’ and on managing termination payouts more prudently. CEO remuneration needs to be fairly structured, performance-linked, and transparent. Boards are adapting by tying exit payments to measurable performance metrics, such as share price, sustainability targets, or post-acquisition milestones, to better align with shareholder interests.

Implications

Executive pay is clearly linked to strong ASX performance and competitive talent markets. However, reputational risk and community expectations remain critical considerations for boards and investors as CEO remuneration levels continue to increase.

Exclusive Report: Get insights into which CEO topped the pay charts this year, the emerging remuneration trends and the implications for boards.

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For more insights on CEO remuneration trends, contact Toby Gardner. For more about our Board Practice, contact Caroline Dever, Tom Mutch.