Are ASX CEO Bonuses Becoming Guaranteed? What the 2026 Pay Report Reveals

Is an executive bonus still an incentive if almost everyone receives one?

That question is worth asking after the Australian Council of Superannuation Investors (ACSI) published its 2026 CEO pay study, covering FY2025 outcomes. Its findings show that annual incentive awards remain common across Australia's largest listed companies.

The data are striking, but frequent bonus payouts do not, by themselves, establish that bonuses are guaranteed. A fair assessment needs to consider the performance thresholds, how much an award can vary and whether the plan can produce a zero outcome.

What does ACSI's 2026 CEO pay report show?

Source: ACSI, CEO Pay in ASX200 Companies: 2026. The study analyses FY2025 remuneration, not FY2026 payout results.

ACSI reports that, excluding the first COVID year, the median ASX100 bonus as a proportion of maximum has generally stayed between 60% and 77% during the 11-year series it reviewed.

This consistency prompts an important question: are thresholds and targets sufficiently demanding?

Why consistent bonus outcomes are not necessarily proof of weak plans

There are reasonable explanations for recurring bonuses. Large organisations set budgets, strategy milestones and operational objectives with the expectation that competent executives will achieve some of them. A well-designed plan may reward delivery at target while reserving substantially higher payments for exceptional outcomes.

The alternative interpretation is that performance thresholds have been calibrated so that a payment is likely even in an ordinary or disappointing year.

Both possibilities can exist within the same market dataset. The Guerdon Associates review of ACSI's findings notes that aggregate medians can obscure meaningful year-to-year variation for individual CEOs.

The best way to test an incentive plan is therefore not to ask only whether an award was made. Ask how close to zero the award could realistically fall, and under what circumstances.

What should a genuinely at-risk CEO bonus look like?

A good executive short-term incentive plan distinguishes at least four performance states:

This example is conceptual; it does not reproduce any particular ASX company's plan.

Three features matter. First, thresholds should be more than a formality. Second, payout curves should reward stronger outcomes without creating sharp or arbitrary windfalls. Third, risk and conduct gateways should be capable of reducing an award when unacceptable outcomes occur, even if financial measures are strong.

The risk of treating 'target' as an entitlement

Organisations sometimes communicate target incentive opportunity as a standard component of remuneration. That can unintentionally turn an at-risk award into an expected annual payment.

This matters when senior executives compare market packages. A CEO on A$2 million fixed pay with a A$2 million target incentive does not have A$4 million in guaranteed annual salary. It has a potential target package, subject to performance and plan rules.

Boards should differentiate fixed remuneration, target opportunity, maximum opportunity, awards earned and cash or shares actually received. Without consistent definitions, remuneration benchmarking can overstate or understate what the market genuinely pays.

How boards can test whether their bonuses are too predictable

A remuneration committee can conduct five practical checks:

1. Back-test three to five years of outcomes: compare actual bonus awards with statutory results, operational results and shareholder returns.
2. Inspect the threshold: ask what real-world performance would produce zero incentive.
3. Review adjustments and discretion: record whether they consistently increase or decrease awards.
4. Test performance differentiation: assess whether target and exceptional outcomes are clearly separated.
5. Review external benchmarking: distinguish target incentive opportunity from realised pay and avoid using the market median as an automatic entitlement.

The question is not whether CEOs should receive a bonus in most years. It is whether the organisation can demonstrate that remuneration moves credibly with performance.

What Australian employers can learn

The same principles apply outside the ASX100. A private company with a CEO bonus, an executive leadership STI or a management incentive program can face similar problems if outcomes become predictable and the links to strategic performance are difficult to explain.

Remunera works with organisations on executive remuneration benchmarking and the design and review of performance-linked reward. To assess whether your incentive framework rewards meaningful differences in outcomes, contact Remunera.

Source period: ACSI research published in July 2026, based on FY2025 remuneration disclosures. Statistics should not be described as FY2026 outcomes.