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# Want World-Leading Businesses? Start With Longer CEO Pay Deals
- URL: https://research.lumenaryinvest.com/longer-ceo-pay-deals/
- Published: 2025-10-02T09:00:00.000Z
- Updated: 2026-08-21T03:37:35.000Z
- Description: Ninety-six per cent of ASX 200 chief executives received a bonus last year. The problem is not the size of the pay; it is the timeframe.
- Author: Lawrence Lam
- Tags: Governance

*First published in [Capital Brief](https://www.capitalbrief.com/article/if-we-want-global-champions-ceo-incentives-must-change-39c02c40-71b5-4925-beb4-1850b8c50328/?ref=research.lumenaryinvest.com), 2 October 2025, as “If we want global champions, CEO incentives must change”.*

Short-term pay breeds short-term thinking. If we want world-class companies, we must reward leaders as though they are founders.

**The Short-Term Trap** 
As an investor, I see more world-leading companies abroad than in Australia. Our largest names remain banks and miners. If we want global champions built here, we must change how we reward CEOs. Current pay structures are short-term, guaranteed, and designed for caution. They reward the status quo.

Contrast this with Apple. Its board locked [Tim Cook into a 10-year equity grant worth US$376 million](https://corpgov.law.harvard.edu/2023/08/07/mega-grants-why-would-a-board-approve-nine-figure-ceo-pay/?ref=research.lumenaryinvest.com). He only saw the payoff after a decade. His incentives were tied squarely to long-term shareholder value. Apple rewarded him as Steve Jobs would have wanted – like a founder.  
  
Europe offers another model. ASML has spent decades ploughing earnings into research on lithography machines. Its leaders were incentivised with long-term equity, keeping them focused on a vision that took decades to bear fruit. In Asia, Tencent’s Pony Ma continues to hold a founder-style stake that forced bold bets on gaming, payments and social media. Both companies prove that sustained leadership incentives drive patient capital allocation; the kind of ambition that turns local players into global leaders.

Here we see the opposite. [In 2024, 96% (137 out of 142) of eligible ASX 200 CEOs received a bonus. Only five missed out](https://acsi.org.au/wp-content/uploads/2025/06/CEO-Pay-in-ASX200-companies-2024-June-2025.pdf?ref=research.lumenaryinvest.com). Many were rewarded despite weak results. These payouts arrive quickly, [typically over three years](https://eganassociates.com.au/at-risk-reward-the-long-term-incentive/?ref=research.lumenaryinvest.com). That horizon is simply too short. It breeds conservatism, not ambition.

**Too Much Focus on Dollars, Not Enough on Timeframe**

This AGM season, pay came under fire at Xero and Macquarie. Almost half of Xero’s investors and more than a quarter of Macquarie’s voted against remuneration reports. Size was questioned. But the real issue was overlooked – timeframe.

Research published in the [*Journal of Finance* shows longer vesting periods drive stronger long-term performance](https://academic.oup.com/rof/article/24/2/305/5529965?ref=research.lumenaryinvest.com). Short vesting encourages myopic thinking. A large bonus is fine, but it should only be paid after a decade or more of performance.

That is how the founders of today’s largest companies were incentivised. Jeff Bezos took a minimal salary for decades. His wealth came from long-term share growth. Jensen Huang built Nvidia over 30 years before extraordinary returns arrived. Long-term ambition was forced into alignment with shareholder wealth.

Australia must do the same. Yet Xero’s CEO is paid over one and three years. Macquarie remains largely short-term. Until we stretch vesting to ten years or more, we will keep breeding caretakers, not visionaries. Our economy will remain led by miners and banks.

**Time for Bold Change** 
I want to see more Australian companies dominating the world stage. Champions led by visionaries who build growth, not just guard the present. It would make our market richer and give investors a wider array of global leaders.

The US has shown what is possible. If we are serious about competing globally, we must incentivise our leaders the same way. Replicating a founder’s mindset means extending the timeframe over which bonuses are paid.

Boards should be bold. Design CEO pay packages that last a decade or more. Tie them to clear, measurable goals that lock leaders in for the long haul. Yes, some long-dated deals will fail. But when they succeed, the payoff is immense. The question isn’t whether a package is A$20 million or A$200 million, but whether it is long-term, performance-linked, and demands founder-like ambition.

The prize is bigger than shareholder returns. Long-term incentives would create a culture where the best global talent wants to run Australian companies. It would attract capital, spur innovation, and give our economy more than banks and miners. By stretching timeframes, we stretch ambition. And in doing so, we give Australia a chance to produce the next generation of companies that define industries, not just follow them.