Benchmarking of ASX 100 remuneration shows that CFOs receive higher percentage increases in pay than CEOs.
— Guerdon Associates’ latest benchmarking of ASX 100 remuneration shows the historically stable 2:1 CEO-to-CFO pay ratio is starting to narrow. The company’s analysis reveals that CFOs are now receiving larger percentage pay increases than CEOs. It points to the ever-growing strategic importance of the CFO role, and this substantial shift will have governance implications for boards across the country.
Remuneration and governance experts, Guerdon Associates, picked out some key findings from their research that indicate the main trends in CEO and CFO pay:
- CFOs saw larger increases in their potential total pay than CEOs did, when looking at the ASX 100 companies. This was 8.0% for CFOs compared to 5.9% for CEOs.
- Despite CFOs seeing bigger increases in total pay, CEOs still earn considerably more. The average CFO receives around 43.2% of a CEO’s pay, though this was found to be up from 42.7%.
- Amongst companies in the ASX 20, CFOs saw a much bigger increase in median TR (10.1% compared to 3.6% for CEOs), indicating that the gap is shrinking faster at the very top.
The main takeaway that Guerdon Associates took from this research is that it’s important for companies to monitor these gaps so they can avoid “narcissistic” pay structures. The company is concerned that some businesses may view these figures and assume that CEOs need to be paid even more to “catch up” with the increased remuneration seen amongst CFOs. In turn, this would widen the gap further and mean that CFOs don’t get paid nearly enough.
To avoid this, boards are encouraged to keep CEO-to-CFO pay in line with historical anchors to maintain governance integrity as incentive structures evolve. It essentially means that the pay gap should still remain within the 2:1 ratio range for it to be fair for everyone.
Guerdon Associates also announced that it is available to provide assistance for any companies that believe they may have a problem in this particular sector. The full details of the report can be found here, complete with all the data that Guerdon Associates found.
About Guerdon Associates
Guerdon Associates provides remuneration and governance services that contribute to improved and sustainable shareholder value for companies across Australia and New Zealand. As an independent company, it does not provide services other than executive and board remuneration, board evaluation and renewal, director evaluation, and board governance consulting.
Contact Info:
Name: Matthew Read
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Organization: Guerdon Associates
Address: Level 7, 261 George Street, Sydney, NSW, 2000, Australia
Phone: +447792487855
Website: https://www.guerdonassociates.com/
Release ID: 89200070
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