COMMENT:

The bedrooms of Australia's children are stuffed with sporting trophies, medallions and ribbons they have won just for turning up.

The little boy who picks up the rugby ball and charges down the sideline towards his own team's try line has a stash, so too the girl whose greatest sporting achievement is second last in the three-legged race.

This is as it should be. Children need encouragement and rewards and who would want to crush their little spirits by denying them a trinket or bauble?

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Sadly, however, like the ungainly children, Australia's chief executives are also being rewarded just for showing up.

According to research into the pay of the chief executives of Australia's 100 largest sharemarket companies, all but six of the 80 CEOs eligible for a bonus in the last financial year received one.

What's more, according to the research by the Australian Council of Superannuation Investors, the median bonus awarded for an ASX100 CEO was up nearly 20 per cent to A$1.76 million, the highest ever recorded in our survey, while the median cash bonus also rose by 8.7 per cent to A$1.11 million.

"Persistent and increasing bonus payments" have pushed executive pay to its highest level in 17 years, ACSI says.

Undoubtedly, there are chief executives among this group who earned every cent of their bonus. But we could also ask whether Australia's corporate leaders are of such outstanding ability that nearly every single one of them achieved the ambitious targets their board's remuneration committee set for them.

Louise Davidson, CEO of ASCI, has her doubts.

"At a time when public trust in business is at a low ebb and wages growth is weak, board decisions to pay large bonuses just for hitting budget targets rather than exceptional performance, are especially tone-deaf," she says.

"This may be a sign that boards have lost sight of the link between a company's social licence and the expectations of communities and investors."

The average Top 100 CEO's realised pay in FY17 was A$6.23 million, which also includes the value of shares which vested in the period. (These are shares or options which investors are given which they can only access after several years.)

Domino's Pizza chief executive Don Meij topped the list with realised pay of A$36,837,702 in the last financial year. It is worth emphasising that this is Meij's realised pay – that is including the increase in the value of the shares that vested that year – not the pay disclosed in the company's annual report.

Much of the rise in CEO pay – in particular Meij's – is due to the strong equity market pushing up the price of their shares and it is true that investors in Domino's would also have done very well. And, to make this story even more complicated, Meij was one of six CEO's in the top 100 who was eligible for a bonus.

Nonetheless, ASCI points out that eight of the top 10 CEOs received at least A$4 million in cash pay as well. "These cash pay levels illustrate that high CEO pay outcomes, even where much of the benefit has been due to equity incentives vesting, are largely driven by board decisions about pay levels and the level of bonuses to award," ASCI states.

All of this raises the question of whether bonuses are too easy to achieve. Are they really providing a reward for outstanding value creation or are they just a cosy deal between a chief executive and a compliant board?

The other issue is the difference between realised pay – the money chief executives actually obtain – and reported pay, that which is publicly disclosed. Thus while Meij's realised pay was astronomical, his reported pay was a mere A$4.7 million. The huge discrepancy in many executives' reported pay compared with their realised pay raises questions about transparency, and if some CEOs are receiving huge sums without investors knowing.

There are signs investors have had enough.

Investment bank Macquarie Group appears to be preparing for outrage about executive pay at its annual general meeting this coming Thursday.

The ASCI report revealed that chief executive Nicholas Moore is the country's third best-paid chief executive, with realised pay of over A$25 million, and his isn't the only executive at the bank on a multi-million dollar pay packet.

In a sign that it is worried about an investor backlash, Macquarie is reported to have hired a global consultancy firm to canvass shareholder voting intentions ahead of the meeting.

The bank wants to avoid an embarrassing vote against its remuneration report.

Macquarie won't be the only company to fact questions. ASCI's Louise Davidson has put the entire market on notice. "We will be looking closely at bonus outcomes in the upcoming reporting season. If they're not transparent and reflective of performance, we will be recommending that our members vote against those remuneration reports," she said.