Compared with the money mere mortals take home, chief executive pay in Australia is the lowest it has been for 11 years. It is also far below the amount CEOs receive in the US.
It is still high enough to severely handicap the ability of companies to participate in the debate about what sacrifices should be made to ensure Australia grows and prospers, however. You just cannot expect everyone to take you seriously when your top spokesperson pulls an eye-watering 63 times average earnings.
The Australian Council of Superannuation Investors' 2013 CEO pay survey is the 13th governance adviser Ownership Matters has compiled for the industry fund group, and that is a long enough period to show the corporate world has at least emerged from a period when it totally lost its moral compass.
Between the first survey in 2001 and 2005, CEOs in the top 100 Australian companies on average received between 55 times average full earnings (2001) and 69 times average earnings (2004 and 2005).
The boom that lit the fuse of the global crisis then overwhelmed commonsense and decency.
Average CEO statutory pay leapt to 81 times average earnings in 2006 and in 2007. As the boom peaked, it hit $5.54 million, 94 times average earnings.
Pay was out of control at that time in almost every way. Short-term bonus hurdles were too low, shares were vesting too quickly and on terms that were too generous, and termination payments were too big.
Company leaders offered various excuses, all of them lame.
One was that companies were only paying what the market demanded. That was not persuasive because the CEO pay market was a closed system, with ineffective shareholder scrutiny. Those asking for ludicrously high pay deals were often being rewarded by people in boardrooms who had hopped on the same gravy train to get there.
Another excuse was that rising profits and sharemarket valuations justified the fat base pays, short-term cash bonuses and long-term share incentives that were being handed out, but that was rubbish, too. Profits were being harvested from an economic system that was expanding at an unsustainable pace, but the short-term focus of remuneration schemes meant executives were rewarded for booking them anyway.
Another line of defence was that criticism of CEO pay was unfair when others, including actors and sports stars, were celebrated for making fortunes. As the global financial crash underlined, that ignored the far more dangerous nature of excessive pay when it occurs inside our largest corporations.
Things have since improved. While average CEO statutory pay was still 84 times average earnings in 2008 as the boom turned into a crisis, it was down to 74 times in 2010, 64 times in 2012, and at $4.8 million, or 63 times average earnings, was last year back at pre-boom levels.
CEOs here are also "poor" compared with their peers in big markets overseas. For example, the High Pay Centre think tank in the UK recently calculated the CEOs of the FTSE 100 group of companies were being paid on average 130 times more than the average employee in their companies.
Last year Bloomberg also looked at US CEO pay and benefits the same way. The leaders of the top 250 companies in the Standard & Poor's 500 index received between 1795 times and 173 times more than their employees, Bloomberg calculated.
Several things have dragged CEO pay back. The financial crisis and the economic slowdown and profit squeeze that followed has pulled pay down everywhere, and changes to the law have also played a role.
Since 2011 in Australia the "two strikes" rule has allowed shareholders to vote against excessive pay deals and, if they do it twice, to vote on a possible board spill.
The move in 2009 to require termination benefits to be approved by shareholders is also behind a decline in median termination payouts to departing CEOs, from $3.5 million in 2008 to $1.3 million in 2013.
Claims by directors and others that the rule changes would create an administrative nightmare and a means for agitators to destabilise boards have proved to be overblown.
The two-strike rule has on occasions been used by corporate agitators who are more concerned with destabilisation than remuneration.
The rule changes have forced company directors to think more carefully about what their shareholders want and to consult them more often, however, and as CEO pay has retreated the average vote against ASX 200 company remuneration reports has fallen, from 10 per cent in 2011 to 7 per cent in 2012 and 6 per cent in 2013.
It is encouraging that CEO pay is back to levels that existed before the boom. Also encouraging is that greater shareholder power over companies played a part in the retreat. This offers hope there will be a brake on excessive pay rises during the next berserk boom.
Any company boss who thinks the pay retreat makes them compelling commentators on matters including pay, tax and economic policy should think again, however.
CEOs might be pulling a bit less than they did in the boom that almost sunk us, but they still make amounts that ensure that in many quarters what they say will be devalued.
