Some of the nation’s biggest companies – including biotechnology giant CSL, telco Optus and oil and gas producer Santos – regularly spend more on bonuses for their chief executives than they pay in company tax in Australia, new analysis shows.
The finding, described as “a bit rich” by a tax expert, rubs against an ordinary understanding of bonuses, which would typically rise when an executive helps drive a company’s performance. This in turn would lead to a bigger take from the Australian Taxation Office.
CSL, a former commonwealth entity listed on the stock exchange in the 1990s, paid Australian corporate tax just once in the past five reporting periods – amounting to about $65m – according to ATO data.
During the same period, it paid $US74.3m ($114.2m), mainly consisting of bonuses, to the two chief executives running the company over that time, according to the Guardian Australia’s analysis.
The mismatch is also evident over longer time periods, with the Melbourne-headquartered company paying corporate tax on just three occasions over the past decade, during a prolonged period of high executive pay rates.
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Jason Ward, a principal analyst at the Centre for International Corporate Tax Accountability and Research, said while CSL is often celebrated as an Australian biotech success, its contribution to the public purse was modest.
“It’s a bit rich for the executives to get so much money when the company, which was initially a public enterprise … [doesn’t] contribute tax revenue from its profits back to its home country,” Ward said.
Biotechnology companies can lower tax bills by holding intellectual property in low or no tax jurisdictions, which allows them to charge other parts of their businesses to access those patents, designs or processes, lowering taxable income, according to Ward.
There are also tax offsets for research and development.
A CSL spokesperson said the company pays taxes in the jurisdictions where it makes profits, and that more than 93% of revenue is derived outside Australia.
“CSL has a low appetite for tax risk and does not engage in aggressive tax planning,” the spokesperson said.
The spokesperson said executive pay rates must take into consideration CSL competes in a global market and many of its senior leaders are based in the US.
“CSL must attract and retain world-class talent who can foster innovation, navigate complex science and manufacturing,” the spokesperson said.
Pay strike
CSL will face a tense annual general meeting next week over its executive pay rates, amid a depressed share price and lingering resentment over the high price tag it paid for the Swiss iron deficiency group Vifor in 2022.
Shareholders delivered a “first strike” against the biotech’s remuneration report last year; a second on 28 October could trigger a board spill.
Proxy advisory firm Institutional Shareholder Services, which has recommended a “qualified” vote in favour of CSL’s remuneration report, has noted its CEO pay is “well above Australian market median”.
The governance group says CSL’s executive short-term bonus structure has an excessive weighting of 40% to non-financial performance measures, many of which are bonuses for “day job responsibilities and not well disclosed”.
CSL disputes that description.
The structure feeds into wider concerns that parts of corporate Australia have designed bonuses so that “everyone wins a prize” – a regular critique made by the Australian Council of Superannuation Investors, which analyses executive pay.
The chief executive of the Governance Institute of Australia, Katrina Horrobin, said “executive remuneration should reflect reward for performance with fairness and transparency”.
Optus bonus
Australian-based executives and directors of Optus received a combined $18.9m in overall pay last financial year, up 24% from the prior 12-month period, according to its financial accounts.
The increase came shortly before Optus suffered its third major operational issue in quick succession, which includes last month’s triple-zero outage, a widespread network failure in 2023 and a major data breach in 2022.
The Singtel-owned Optus went from a regular taxpayer in Australia prior to 2020 to a company that now regularly reports zero taxable income. It consistently generates annual revenues of more than $8bn in Australia.
An Optus spokesperson said its 2024 negative tax position was due to infrastructure investments and operating expenses.
“Optus pays taxes like any Australian company and FY2020 was when it was last profitable,” the spokesperson said.
In response to questions over executive pay rates, the spokesperson said Optus’ Australian board had expanded to “strengthen governance and oversight of the company”.
Adelaide-based Santos has not paid corporate tax in Australia for 10 consecutive years, even after recording tens of billions of dollars in oil and gas sales. Meanwhile, Santos’s chief executive, Kevin Gallagher, received $5.87m in 2024.
In its last annual report, Santos said it had paid $1bn in “global tax” in 2024, a figure it notes includes “employee tax”.
