CSL and Optus pay millions to executives despite paying no company tax in Australia | Executive pay

Some of the country’s biggest companies, including biotech giant CSL, telecommunications company Optus and oil and gas producer Santos, regularly spend more on bonuses for their senior executives than they pay in company tax in Australia, new analysis shows.

Described by one tax expert as “a little rich”, the finding runs counter to the usual understanding of bonuses generally increasing if an executive helps improve a company’s performance. This would lead to a larger share being received from the Australian Taxation Office.

CSL, a former Commonwealth corporation that was listed on the stock exchange in the 1990s, has paid Australian corporation tax only once in the last five reporting periods – amounting to around $65 million, according to ATO data.

During the same period, two senior executives who ran the company at the time were paid US$74.3 million ($114.2 million), mostly in bonuses, according to analysis by Guardian Australia.

This incompatibility is also evident over long periods of time; While the Melbourne-based company has long had high executive pay rates, it has only paid corporation tax three times in the last decade.

_{Sign up: AÜ Breaking News email}

Jason Ward, principal analyst at the International Center for Corporate Tax Liability and Research, said although CSL was often celebrated as Australia’s biotechnology success, its contribution to the public purse was modest.

“It is a bit rich for the managers that the company, which was originally a public institution, earns this much money.to … [doesn’t] Ward said he would contribute to repatriating tax revenues from his profits.

According to Ward, biotech companies can reduce their tax bills by keeping their intellectual property in low-tax or no-tax jurisdictions; this could allow them to charge other parts of their business for access to these patents, designs or processes, reducing taxable income.

There are also tax breaks for research and development.

A CSL spokesman said the company paid tax in the territories where it made profits and more than 93% of revenue was generated outside Australia.

“CSL has a low appetite for tax risk and does not engage in aggressive tax planning,” the spokesman said.

Executive pay rates must take into account that CSL competes in a global market and most of its senior leaders are based in the United States, the spokesman said.

“CSL needs to attract and retain world-class talent who can drive innovation and navigate complex science and manufacturing,” the spokesperson said.

wage strike

CSL faces a tense annual general meeting next week over executive pay rates, amid a slump in its share price and ongoing anger over the high price tag it paid for Swiss iron deficiency group Vifor in 2022.

Shareholders staged a “first strike” against the biotech’s pay report last year; A second on October 28 could trigger the wood to spill.

Proxy advisory firm Institutional Shareholder Services, which recommended a “qualified” vote in favor of CSL’s pay report, said CEO pay was “well above the Australian market average”.

The governance group says CSL’s short-term bonus structure for executive is overweighted by 40% on non-financial performance measures, most of which are “bonuses related to day-to-day job responsibilities and are not well explained”.

CSL disputes this statement.

The structure feeds into wider concerns that parts of corporate Australia are designing bonuses so that “everyone wins a reward”; This is a regular criticism from the Australian Superannuation Investors Council, which analyzes executive pay.

Katrina Horrobin, chief executive of the Australian Governance Institute, said “executive pay should reflect reward for performance with fairness and transparency”.

Optus bonus

Optus’ Australia-based executives and directors received total salaries of $18.9 million According to its financial accounts, there was a 24% increase in the last financial year compared to the previous 12-month period.

The increase comes shortly before Optus suffers its third consecutive major operational issue, including a triple zero outage last month, a widespread network failure in 2023 and a major data breach in 2022.

Singtel-owned Optus has gone from being a regular taxpayer in Australia before 2020 to now regularly reporting zero taxable income. It consistently generates more than $8 billion in annual revenue in Australia.

An Optus spokesman said the 2024 negative tax position was driven by infrastructure investment and operating expenses.

“Optus pays tax like any Australian company and the 2020 financial year was the last time it was profitable,” the spokesperson said.

In response to questions about executive pay rates, the spokesman said Optus’ Australian board had expanded to “strengthen its management and oversight of the company”.

Adelaide-based Santos has paid no corporate tax in Australia for 10 consecutive years, even after selling tens of billions of dollars of oil and gas. Meanwhile, Santos CEO Kevin Gallagher received $5.87 million in 2024.

In its last annual report, Santos said that it paid $1 billion in “global taxes” in 2024 and stated that this figure also included “employee taxes”.