With the recent completion of the ASX reporting season, there were some preliminary trends of note. Amongst the ASX100 companies that announced their FY2023 results, the median salary increase for key management personnel (KMP) was just under 4%. This is broadly comparable to what was observed amongst the FTSE100 companies.
The median short term incentive (STI) outcome amongst KMP of the ASX100 companies was 60% of maximum. This number is significantly lower than the corresponding 76% observed amongst FTSE100 companies.
Interestingly, more ASX100 and FTSE100 company Boards are exercising their discretion to modify STI outcomes (both upwards and downwards) to reinforce executive pay-for-performance alignment and better ensuring executive-shareholder experience is aligned.
The median long term incentive (LTI) vesting outcome amongst KMP of the ASX100 companies was 69% of maximum. This was higher than for their peers on the FTSE100 (61% of maximum) and significantly higher than for companies on the FTSE250 (56% of maximum).
Boards are also scrutinising LTI outcomes more to ensure executive conduct, broader stakeholder and reputational priorities are not compromised in the pursuit of financial performance. The potential impact of ‘windfall’ gains continues to be considered.
Perhaps an indication of what is to come for ASX100 companies, more FTSE companies either strengthened or introduced post-exit shareholding guidelines for their senior executives.
We invite you to get in contact to discuss what opportunities the above trends present for your organisation’s executive pay arrangements.
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