He’s a CEO many of you have never heard of, but IDP Education’s Andrew Barkla was the nation’s highest-paid chief executive last financial year, taking away $38 million — that’s about 420 times the average wage.
The company he heads places international students into Australian education and conducts English-language tests.
Pre-COVID-19, it had seen strong growth and Mr Barkla, who took home a big chunk of his remuneration in shares, reaped the benefits (he exercised options granted prior to the company’s 2015 IPO).
It is the first time a CEO outside the ASX100 has topped the Australian Council of Superannuation Investors (ACSI) list of the highest-paid CEOs.
The report shows that even before the coronavirus crisis, fixed pay and bonuses for Australia’s leading CEOs were edging down.
Median fixed pay fell from $1.95 million in the 2012 financial year to $1.76 million last financial year.
And the number of eligible ASX200 CEOs who did not get a bonus more than trebled, from seven in the 2018 financial year to 25 last financial year.
The only CEO to hold a higher record than Mr Barkla was in the 2017 financial year when Domino’s Pizza boss Don Meij earned about $37 million.
No women made the list of the top 10 CEOs, as Macquarie Group CEO Shemara Wikramanayake was appointed halfway through the 2019 financial year.
10 highest-paid CEOs in FY19:
1.Andrew Barkla, IDP Education, $37,761,322
2.Paul Perreault, CSL, $30,526,634
3.Philippe Wolgen, Clinuvel Pharmaceuticals, $20,624,450
4.Michael Clarke, Treasury Wine Estates, $19,853,177
5.John Guscic, Webjet, $16,498,937*
6.Greg Goodman, Goodman Group, $14,967,391
7.Robert Kelly, Steadfast Group, $14,419,677
8.Alan Joyce, Qantas Airways, $12,217,400
9.Colin Goldschmidt, Sonic Healthcare, $11,912,450
10.JS Jacques, Rio Tinto, $10,323,975
(Source ACSI. The list is of ASX200 CEOs on a realised pay basis. *Webjet CEO realised pay includes share options which are currently valued to be significantly lower.)
An IDF Education spokeswoman said Mr Barkla’s current remuneration was “consistent with market benchmarking” and the value created through the exercise of those options in FY19 reflects the performance of the business during that period.
“IDP Education’s market capitalisation rose from $660 million at IPO to $4.4 billion at 30 June 2019, in turn resulting in significant value creation for shareholders of the company,” the spokeswoman said.
Seven of the 20 highest-paid outside the ASX100
Often the top 10 come from companies that sit at the top of the ASX100.
But in FY19, seven of the 20 highest-paid CEOs came from outside that group.
And three of the five highest-remunerated CEOs in the 2019 financial year ran ASX101-200 companies: Clinuvel’s Philippe Wolgen realised $20.6 million and Webjet’s John Guscic, $16.5 million.
Mr Wolgen’s $20.62 million tally for FY19 included $19.28 million from the vesting, in March 2019, of performance rights granted when CUV’s share price was well below $5 (the share price at vesting was $26.90).
CSL’s Paul Perreault was the second-highest earner in FY19. He became only the fourth CEO in six years to realise pay above $30 million.
Much of Mr Perreault’s realised pay ($13.42 million) came from options exercised at a price of $73.73 when the share price was $215.
Webjet CEO John Guscic’s realised pay includes a $15 million gain from options with an exercise price of $5.54 exercised when the share price was $17.57. He did not sell these shares and the current share price is below the option exercise price.
While Ms Wikramanayake didn’t make the top 10 list, she had realised pay for the year of $19.30 million, most of which related to incentives awarded in her prior role as head of Macquarie Asset Management.
All CEOs earn big multiples over the average wage. ABS data shows that in the 12 months to November 2019, the average full-time wage, with overtime and penalty rates, was $1,722.8 a week (about $90,000 annually).
Boards exercise some ‘restraint’ on bonuses
Of 156 CEOs in the report sample, 146 were eligible for a bonus.
In the ASX100, 12 CEOs received zero bonus, compared to FY18 when there was only one who did.
“It is encouraging to see that, after many years of engagement and scrutiny from investors, boards have applied a greater level of restraint assessing executive remuneration,” ACSI chief executive Louise Davidson said.
“More boards are using sensible discretion to rein in outcomes for senior executives.”
The median bonus awarded, as a proportion of maximum, was 60 per cent in the ASX100. This is a fall from 70 per cent in FY18.
Since FY11, the ACSI study has distinguished between “cash bonuses” — bonuses where the full amount is accrued and awarded in a single year — and “bonuses awarded”, where part of the amount is deferred, often into equity, and vests over several years.
This captures the trend toward listed entities such as Telstra, Wesfarmers and Woodside adopting these combined incentive plans.
The highest bonuses awarded in FY19 were all for CEOs participating in combined incentive arrangements.
Wesfarmers’ Rob Scott received the highest bonus award, $6.5 million, which was 87 per cent of the maximum.
Mr Scott was followed by Telstra’s Andrew Penn ($5.34 million) and Woodside’s Peter Coleman ($5.27 million).
However, the COVID-19 crisis will likely further push down CEO bonuses.
Some companies, including Qantas (whose boss Alan Joyce topped the 2018 list as the highest-paid CEO at $24 million) have already announced freezes.
In June, Qantas announced 6,000 job cuts and Mr Joyce said he would continue not taking a salary and there were no bonuses being paid to the airline’s executives this year.
Ms Davidson said in volatile market conditions, boards need to carefully consider pay and incentives and how this will play out externally as many Australians have lost their jobs.
“Equity incentives have the potential to significantly boost the quantum of remuneration,” Ms Davidson said.
Over the past three years, three CEOs have collected more than $15 million in cash or cash equivalents.
This includes CSL’s Paul Perreault ($17.16 million), Treasury Wine’s Michael Clarke ($16.52 million) and Sonic Healthcare’s Colin Goldschmidt ($15.87milliom).
The report notes that “this creates a significant buffer of personal wealth should the company’s performance or share price subsequently decline”.
Total termination payments fell to $18.35 million for 14 CEOs, down from FY18’s $26.08 million for 15 people (the FY18 figure was revised up because Adelaide Brighton disclosed in its 2019 accounts additional termination payments to the departed Martin Brydon, which brought his total to $5.36 million).
AGL Energy’s Andy Vesey received the largest termination payment in FY19: $3.92 million.
Vesey’s payment, like that of seven other payments to former CEOs, was increased by the fact that he remained employed for several months after stepping down as CEO and continuing to receive full salary during this period.
