Getting Executive Pay Right: A Practical Guide to Benchmarking Against ASX Peers, Industry Competitors and Market Data

Executive pay benchmarking is one of the most important, and most misunderstood, parts of remuneration governance.

For an ASX-listed company, benchmarking executive remuneration is not simply about finding a market median and adjusting salaries to match it. It is about helping the board and Remuneration Committee make informed, defensible and commercially sensible decisions about how much to pay senior executives, how to structure pay, and how to explain those decisions to shareholders.

Done well, benchmarking helps answer:

• Are we paying enough to attract and retain the right executives?
• Are we overpaying compared with companies of similar size and complexity?
• Is our pay mix appropriate?
• Are incentive opportunities aligned with performance?
• Can we defend our decisions in the remuneration report?
• Would shareholders understand why this package is fair?

Done poorly, benchmarking becomes a dangerous shortcut. It can inflate pay, create weak peer groups, ignore company performance, and produce recommendations that look convenient rather than credible.

The practical aim is simple:

Use market data as evidence, not as an excuse.

1. Start with the decision you need to make

Before collecting any market data, be clear about the decision the company is trying to support.

Executive pay benchmarking can be used for many different purposes, including:

• appointing a new CEO or KMP executive;
• reviewing annual fixed remuneration;
• setting STI or LTI opportunities;
• redesigning the executive remuneration framework;
• testing whether current pay remains market competitive;
• assessing retention risk;
• preparing the remuneration report;
• responding to shareholder or proxy adviser feedback;
• reviewing pay after a major acquisition or divestment;
• assessing an internal promotion;
• checking whether role scope has changed; or
• preparing a board or Remuneration Committee paper.

The benchmarking approach should change depending on the purpose.

For example, if the company is hiring a new CFO from the external market, the review may focus heavily on competitive fixed remuneration and total package opportunity. If the company is reviewing annual increases after a difficult year, the review should place more weight on performance, shareholder experience and internal restraint. If the company is redesigning incentives, fixed pay data alone is not enough; the review must look at STI and LTI design, performance measures, vesting periods and total reward opportunity.

Do not start with “What is the median?”

Start with:

What decision are we trying to make, and what evidence would help the board make it well?

2. Define the executive roles properly

Benchmarking should compare roles, not just job titles.

A “Chief Operating Officer” in one ASX-listed company may manage thousands of employees, safety-critical operations, supply chains and major capital projects. In another company, the COO may manage a smaller internal delivery function. A “Chief Growth Officer” may be responsible for enterprise strategy, M&A and international expansion, or may primarily lead sales.

Titles can mislead. Role scope is what matters.

Before benchmarking, prepare a role profile for each executive.

Practical role profile

Area	Details to capture
Role title	CEO, CFO, COO, Chief Commercial Officer, General Counsel, etc.
Reporting line	Reports to Board, CEO or another executive
KMP status	Current KMP, former KMP or non-KMP executive
Business scope	Group-wide, division, region or function
Financial accountability	Revenue, cost base, assets, capital expenditure, profit responsibility
People leadership	Number of employees directly or indirectly led
Geographic scope	Australia only, regional, global
Strategic importance	Growth, transformation, turnaround, acquisition, regulatory, operational
Risk exposure	Safety, financial, regulatory, cyber, environmental, reputational
Role maturity	New appointment, expanded role, stable role, interim role

This profile helps ensure the company benchmarks a real role, not a title.

3. Decide what parts of pay you are benchmarking

Executive remuneration has several components. A good benchmarking exercise should separate them.

The main components are:

• fixed remuneration;
• superannuation and benefits;
• short-term incentive opportunity;
• short-term incentive outcomes;
• deferred STI;
• long-term incentive opportunity;
• equity grants;
• sign-on or buy-out awards;
• retention awards;
• termination provisions;
• minimum shareholding requirements; and
• total remuneration.

A common mistake is to benchmark fixed pay only, then assume the package is market competitive. That can be misleading.

Two executives may both have fixed remuneration of $700,000. One may have a modest STI and no LTI. Another may have an STI opportunity of 100% of fixed pay and an LTI opportunity of 150% of fixed pay. Their total reward opportunity is very different.

Practical benchmarking views

Pay view	What it tells you
Fixed remuneration	Whether base pay is competitive for the role
Target total remuneration	What the executive can earn for expected performance
Maximum total remuneration	What the executive can earn for stretch performance
Statutory remuneration	Accounting-based view used in annual report disclosures
Realised remuneration	What the executive actually received or vested
Pay mix	Balance between fixed pay, STI and LTI
Equity exposure	Alignment with shareholders

For senior executives, total remuneration and pay mix often matter more than fixed pay alone.

4. Build a primary ASX-listed peer group

The primary peer group should include ASX-listed companies that are genuinely comparable.

Peer selection should be deliberate and explainable. If the board cannot explain why a company is in the peer group, it probably should not be there.

For ASX-listed companies, peer group selection usually considers:

4.1. Market capitalisation

Market capitalisation is often the starting point because it reflects investor expectations, company scale and market profile. A common practical range is around 0.5x to 2x the company’s market capitalisation, although this should be adjusted for sector volatility.

For example, if the company has a market capitalisation of $800 million, the initial screen might identify companies between $400 million and $1.6 billion. The range can then be refined based on sector, revenue, complexity and business model.

4.2. Revenue

Revenue is useful for companies where operating scale matters. For example, retailers, industrials, services companies and consumer businesses may be better compared using both market capitalisation and revenue.

4.3. Enterprise value

Enterprise value can be useful where capital structure varies significantly. It may provide a better view of total business scale than market capitalisation alone.

4.4. Assets or funds under management

For property, infrastructure, investment and financial services companies, assets, funds under management or loan book size may be more meaningful than revenue.

4.5. Industry sector

Sector is important because executive talent markets differ. Mining, banking, technology, healthcare, consumer, energy, infrastructure and professional services companies all have different pay patterns and executive role demands.

4.6. Complexity

Complexity can justify pay differences even where company size is similar. Consider international operations, regulatory intensity, safety exposure, capital projects, workforce size, cyber risk, M&A, stakeholder scrutiny and turnaround conditions.

4.7. Company lifecycle

A founder-led growth company, a mature dividend-paying company, a newly listed company and a turnaround company may require very different executive capabilities.

5. Add an industry competitor group

The ASX peer group is not always the same as the talent market.

A company may be listed on ASX but compete for executives with:

• private equity portfolio companies;
• global multinationals;
• unlisted Australian businesses;
• infrastructure funds;
• international technology companies;
• mining operators outside the ASX peer set;
• banks and insurers;
• consulting or professional services firms;
• government business enterprises; or
• offshore competitors.

This is why a second peer group can be useful: the industry competitor group.

The industry competitor group answers:

Where do we actually hire executives from, and where could we lose them to?

For example:

• An ASX-listed software company may need to compare with global technology firms and private equity-backed SaaS businesses.
• An ASX-listed mining company may need to compare with both ASX resources peers and global mining operators.
• An ASX-listed healthcare company may need to compare with global life sciences companies, not only local healthcare peers.
• An ASX-listed financial services company may need to compare with banks, insurers, superannuation funds and fintech businesses.

The industry competitor group is especially important for scarce roles such as CFO, CTO, Chief Risk Officer, Chief Commercial Officer, Chief People Officer, General Counsel or specialist operational leaders.

6. Use market data carefully

Market data can come from several sources:

• annual reports of ASX-listed companies;
• remuneration databases;
• remuneration consultants;
• proxy adviser reports;
• executive search insights;
• disclosed KMP remuneration tables;
• survey data;
• industry reports;
• investor feedback;
• internal recruitment experience; and
• actual candidate expectations during hiring processes.

Each source has strengths and weaknesses.

Annual reports are public and transparent, but they may not provide enough detail for non-CEO roles. Consultant surveys can be more detailed, but the methodology and participant group need to be understood. Search firm insights can be useful for live recruitment markets, but they may be anecdotal. Proxy adviser views are useful for shareholder expectations, but they are not a full market benchmark.

A strong benchmarking exercise triangulates several data sources rather than relying on one.

Practical data quality questions

Ask:

• How recent is the data?
• What financial year does it relate to?
• Does it include only ASX-listed companies?
• Does it include private companies?
• Does it include target or maximum incentive opportunity?
• Does it show actual outcomes or opportunity?
• Does it include one-off awards?
• Are part-year executives adjusted?
• Are sign-on and termination payments excluded?
• Is equity valued consistently?
• Is superannuation included?
• Are outliers identified?
• Is the sample size large enough?

Benchmarking is only as good as the data behind it.

7. Normalise the data before comparing

Raw remuneration data can be misleading.

Before comparing executives, normalise the data.

For example:

• annualise part-year remuneration;
• separate one-off sign-on payments;
• exclude termination payments when assessing ongoing pay;
• separate accounting share-based payment expense from grant value;
• identify founder or major shareholder arrangements;
• adjust for role changes during the year;
• separate executive directors from non-executive directors;
• check whether STI and LTI outcomes are actual, target or maximum;
• adjust for currency if using global data;
• remove obvious outliers where justified; and
• check whether remuneration includes superannuation.

Practical normalisation table

Issue	Why it matters	Practical treatment
Part-year appointment	Annual report pay may look artificially low	Annualise fixed pay for benchmarking
Termination payment	Inflates total remuneration	Exclude from ongoing market comparison
Sign-on award	One-off recruitment cost	Disclose separately from normal remuneration
Share-based payment expense	Accounting value may not equal grant or realised value	Compare consistently across peers
Founder CEO	May have unusual pay pattern	Treat as outlier or explain separately
Major role change	Current year data may not reflect new scope	Adjust or use forward-looking package

Without normalisation, the company may draw the wrong conclusion.

8. Compare role by role

Do not benchmark all executives as one group.

Each executive role has a different market.

The CEO market is different from the CFO market. The CFO market is different from the COO market. A Chief Technology Officer in a software company may have a very different market from a Chief Technology Officer in a mining company.

Each role should be assessed individually.

Practical role-by-role table

Role	Current fixed remuneration	Market median	Current position	Target total remuneration position	Comment
CEO	$X	$X	Slightly below median	Around median	No major change recommended due to shareholder returns
CFO	$X	$X	Below median	Below median	Increase may be justified due to role expansion
COO	$X	$X	Around median	Above median	Current positioning appropriate
Chief Commercial Officer	$X	$X	Above median	Above median	Reflects scarce skills and external hire premium

This allows the Remuneration Committee to see where intervention is needed and where restraint is appropriate.

9. Look at pay mix, not only quantum

For ASX-listed companies, executive remuneration is not just about how much is paid. It is also about how pay is structured.

A package can be market competitive in quantum but poorly designed.

For example:

• fixed pay may be too high and incentives too weak;
• STI may be too large compared with LTI;
• LTI may be too small to create long-term alignment;
• incentive targets may be too easy;
• equity may vest too quickly;
• there may be no deferral;
• performance conditions may not align with strategy;
• there may be too much discretion and not enough structure.

A practical benchmarking review should compare pay mix.

Practical pay mix table

Role	Fixed pay	STI opportunity	LTI opportunity	Total opportunity	Market observation
CEO	40%	25%	35%	100%	More LTI-weighted than peers
CFO	50%	25%	25%	100%	Around market
COO	55%	30%	15%	100%	Less LTI exposure than peers

The right pay mix depends on company strategy. A high-growth company may emphasise long-term equity. A turnaround company may need strong short-term operational measures. A mature company may focus on disciplined fixed pay and carefully calibrated incentives.

10. Benchmark incentive design

STI and LTI opportunities should be benchmarked, but so should the design.

For STI, compare:

• target opportunity;
• maximum opportunity;
• financial measures;
• strategic measures;
• individual performance measures;
• safety or risk gateways;
• deferral arrangements;
• payment form;
• board discretion;
• malus and clawback; and
• disclosure approach.

For LTI, compare:

• grant size;
• instrument type;
• performance period;
• performance measures;
• relative TSR use;
• EPS or return measures;
• hurdles and vesting schedule;
• retesting;
• holding locks;
• treatment on cessation; and
• shareholder approval practices.

A package may appear competitive because the STI opportunity is high, but if the performance measures are weak or too discretionary, it may create shareholder risk.

11. Consider company performance and shareholder experience

Benchmarking should never be separated from performance.

A company that has delivered strong shareholder returns, earnings growth and strategic progress may have more room to justify competitive or above-market pay outcomes. A company with weak performance, poor share price outcomes or a recent remuneration strike needs to be more cautious.

Before recommending changes, ask:

• How has the company performed over one, three and five years?
• How does TSR compare with peers?
• Have dividends increased or decreased?
• Are earnings growing?
• Has the company met guidance?
• Has there been a major safety, conduct or regulatory issue?
• How did employees experience the year?
• Did shareholders receive value?
• Would a pay increase look reasonable in context?

Market data may show an executive is below median. That does not automatically mean the company should increase pay immediately. Timing and performance matter.

12. Check internal relativities

External market data is important, but internal relativities also matter.

If the CFO receives a large increase, what does that imply for the COO, Chief Commercial Officer or General Counsel? If a new external hire is paid more than existing executives, is the difference justified by role scope or market scarcity? If executive pay increases significantly while broader employee wage increases are modest, how will that be explained?

A practical internal relativity review should compare:

• CEO to CFO ratio;
• CEO to other KMP ratio;
• CFO to other executive roles;
• executive increases compared with workforce increases;
• fixed pay hierarchy;
• STI opportunity hierarchy;
• LTI eligibility hierarchy; and
• one-off awards.

Internal relativities do not mean everyone must be paid the same. They mean differences should be explainable.

13. Avoid the market median trap

“Pay at median” sounds safe, but it can be lazy.

Median is a reference point, not a decision.

An executive may appropriately sit below median if they are new to role, internally promoted, still developing, or leading a smaller scope than peers.

An executive may appropriately sit above median if they have scarce skills, exceptional performance, expanded responsibilities, external market pressure or a particularly complex role.

The key is to document why.

Practical positioning framework

Positioning	When it may be appropriate
Below median	New appointment, developing executive, smaller role scope, constrained company performance
Around median	Fully competent executive in stable role with normal market competitiveness
Above median	Scarce skills, expanded role, strong performance, high retention risk, complex transformation
Upper quartile	Exceptional capability, highly competitive market, critical strategic role, clear shareholder value case

Boards should be cautious about using upper-quartile positioning unless the rationale is strong.

14. Prepare a clear benchmarking recommendation

A good benchmarking paper should not simply show data. It should make a recommendation.

The recommendation should include:

• current remuneration;
• market position;
• proposed change;
• reason for change;
• performance context;
• shareholder implications;
• internal relativity impact;
• implementation timing; and
• disclosure impact.

Practical recommendation table

Executive	Current position	Benchmark finding	Recommendation	Rationale
CEO	Fixed pay slightly below median; total remuneration around median	No material market gap	No fixed pay increase	Reflects restraint given shareholder returns; total opportunity remains competitive
CFO	Fixed and total remuneration below median	Role expanded following acquisition	Increase fixed remuneration by 5%	Moves closer to median while preserving internal relativities
COO	Around median	Competitive package	No change	Current remuneration remains appropriate
CCO	Above median	Externally hired scarce skill role	Maintain current positioning	Reflects market scarcity and strategic growth role

This format is practical because it connects data to judgement.

15. Stress-test the recommendation

Before the recommendation goes to the Remuneration Committee or board, stress-test it.

Ask:

• Is the peer group credible?
• Would we defend the peer group publicly?
• Are any peers too large or too generous?
• Are the data points current?
• Have one-off payments been excluded?
• Are part-year figures annualised?
• Does the recommendation align with company performance?
• Does it create internal relativity issues?
• Would shareholders understand the decision?
• Is the increase affordable?
• Does it create precedent risk?
• Does the annual report narrative support the decision?
• Is the recommendation based on judgement, not just the median?

If the recommendation cannot survive these questions, improve it before it goes to the committee.

16. Document the rationale for governance and disclosure

For ASX-listed companies, benchmarking decisions may later need to be explained in the remuneration report or to investors.

The company should document:

• purpose of the benchmarking;
• data sources used;
• peer group selection criteria;
• remuneration components benchmarked;
• treatment of outliers;
• current market positioning;
• recommended positioning;
• board judgement applied;
• link to performance;
• shareholder considerations; and
• final decision.

This record helps if the decision is questioned later.

It also helps the annual report team explain remuneration decisions clearly and consistently.

17. Common mistakes to avoid

Do not benchmark job titles without checking role scope.

Do not use a peer group that is too large or too flattering.

Do not rely only on market capitalisation.

Do not ignore industry competitors.

Do not mix fixed pay, target pay, maximum pay and realised pay.

Do not compare accounting share-based payment expense with grant opportunity.

Do not treat median as an automatic answer.

Do not ignore company performance.

Do not forget internal relativities.

Do not use benchmarking to justify a decision already made.

Do not overlook shareholder and proxy adviser expectations.

Do not present data without a recommendation.

18. Practical benchmarking process

A disciplined executive pay benchmarking process can follow these steps:

Step 1: Define the decision

Clarify whether the review supports annual increases, recruitment, retention, incentive design or disclosure.

Step 2: Confirm the executives covered

Identify which roles are KMP and which other executives should be reviewed.

Step 3: Prepare role profiles

Document scope, accountability, complexity and market relevance.

Step 4: Select ASX-listed peers

Use market capitalisation, revenue, sector, enterprise value, assets, complexity and lifecycle.

Step 5: Select industry competitors

Identify where the company hires from and loses talent to.

Step 6: Gather market data

Use annual reports, remuneration databases, consultant data, search insights and industry sources.

Step 7: Normalise the data

Adjust for part-year service, one-off awards, termination payments, equity valuation differences and outliers.

Step 8: Compare pay components

Review fixed pay, STI, LTI, total remuneration, pay mix and equity alignment.

Step 9: Apply company context

Consider performance, shareholder experience, affordability, retention risk and internal relativities.

Step 10: Prepare recommendations

Turn the analysis into clear, practical and defensible recommendations.

Step 11: Document the decision

Record the data, peer group, rationale, judgement and approval pathway.

Step 12: Update records and disclosures

Ensure payroll, incentive records, equity records and annual report disclosures reflect the approved decisions.

19. Final checklist for the Remuneration Committee

Before approving executive pay changes based on benchmarking, the committee should ask:

• What decision is this benchmarking supporting?
• Are the peer companies genuinely comparable?
• Have we considered both ASX peers and real talent competitors?
• Is the data current and normalised?
• Are we looking at total remuneration, not just fixed pay?
• Is the pay mix appropriate?
• Are incentive opportunities aligned with strategy and performance?
• Does the recommendation fit company performance?
• Are internal relativities reasonable?
• Would shareholders understand the outcome?
• Can we explain this clearly in the remuneration report?

These questions turn benchmarking from a spreadsheet exercise into a governance decision.

Final thought

Executive pay benchmarking is not about chasing the market. It is about understanding the market, applying judgement and making decisions that are fair, competitive and defensible.

For ASX-listed companies, the best benchmarking process brings together three perspectives:

ASX-listed peer groups show how comparable listed companies pay.

Industry competitors show the real talent market.

Market data provides broader evidence and context.

But the board still has to decide what is right for this company, this executive, this performance context and this shareholder base.

The strongest remuneration decisions are not the ones that simply follow the median.

They are the ones that can be explained clearly:

This is the market evidence. This is the company context. This is the judgement we applied. This is why the outcome is fair.