AGL Energy chief executive Michael Fraser.

ALREADY smarting from bill shock, electricity customers found reason to cuss last month when they heard that AGL Energy’s new boss Michael Fraser had picked up an 85 per cent pay increase to $6.3 million.

The news was met with outrage and indignation from the TV current affairs shows. One week later, adding consumer insult to injury, Origin Energy chief Grant King trumped Fraser with a package of $8.35 million.

Customer satisfaction is obviously not a measure to which CEO salaries are closely pegged.

Origin Energy’s Grant King.

BusinessDay found AGL had delivered the least value for money for shareholders. Earnings per share, the cleanest measure of value for shareholders, dropped 80 per cent to 23.8 cents per share last year.

Despite a generous rise in executive remuneration, the big retailer managed only a 2 per cent increase in share price year-on-year and a 5 per cent increase in total revenue.

Origin Energy fared better, although the share price did drop 21 per cent.

King has steadily lifted revenue and profits over the past five years, which is clearly delivering value for shareholders.

Among other findings:

  • Remuneration at Origin and AGL was comparable to ASX peer companies of a similar size.
  • State-owned electricity companies such as Transgrid, Endeavour Energy, Ausgrid and Essential Energy have had more modest growth in salaries for their CEOs over the past five years.
  • Bosses’ salaries at the state-owned utilities are a fraction of those for the listed companies.
  • Executive remuneration at Spark and SP Ausnet has been contained to the level of performance. The foreign parents have been the recipients of fees that have exceeded performance by a large margin.