Companies such as CSL and Optus, which pay no corporate tax in Australia, have awarded massive bonuses to their chief executives, raising questions about the justification for such payments. Critics argue that if these companies are reporting losses, there is no rationale for rewarding executives with bonuses.
Bonuses are intended to align executive pay with company performance, but evidence shows they often work only one way. Analysis of CEO pay reveals that salaries and bonuses vary by 15-17% annually in normal conditions, compared to 22% variation for average UK households. Unlike most workers, senior managers face no real downside risk beyond missing a bonus, with dismissed executives often receiving hefty payouts.
The bonus culture is linked to the privatisation era of the 1990s, which promised economic dynamism and a productivity miracle. However, productivity growth has stagnated since 2000, with most gains coming from imported information technology. Both CSL and Optus were once public enterprises, sold off with promises of efficiency and competition, but have instead seen rising executive pay and poor consumer service.
Privatisation aimed to replace public inefficiency with market discipline, but it fostered a cult of the CEO and a focus on shareholder value. Former public enterprises now frequently appear on lists of Australia's most hated companies. While neoliberal reforms have lost public support, they continue to drive inequality.
Resistance is growing through gradual reversals of privatisation and worker pushback against return-to-office demands. Experts suggest that the idea of CEOs as natural rulers is being challenged, and a path to reform may emerge.
