Executives Getting Less

Amid the global economic challenges and increasing industry competition, more and more executives are foregoing getting their bonuses or agreeing to putting a freeze on their salaries.

Last February, two executives from mining company Rio Tinto informed its remuneration committee to exclude them from the list of executives that would receive an annual bonus. Jan de Plessis, Rio Tinto chairman, has agreed and commended the two executives.

Two executives of competing company BHP Billiton have also approached its remuneration committee to tell them that they do not wish to be considered for a bonus for 2012. According to its chairman Jac Nasser, the board agreed with the two executives.

And while the moves appear to be magnanimous, some industry observers said the decision was to delay the embarrassment over some botched deals. Rio Tinto received a write-down for the purchase of Alcan while BHP Petroleum had a similar write-down for the purchase of US shale-gas assets.

Other companies are following the executives-don’t-get-bonuses trend. BlueScope Steel, Goodman Fielder, Platinum Asset Management, Commonwealth Bank, and ANZ Bank have also announced that they are freezing salary increases this year.

ANZ chief executive officer Mike Smith has said that their executives understand the need of the company to restrain costs and are doing their part to do so.

A research by the Australian Council of Superannuation Investors, however, tells quite a different story. From 2000 to 2010, research showed that the median fixed salary of chief executives increased 131 percent. Bonuses, meanwhile, jumped 190 percent in the same decade.

These chief executives are all from the top 100 ASX Australian companies.