We spoke to one of the ASX’s highest-paid CEOs. Here’s how she defended her $23m pay packet

2 weeks ago 3

Xero boss Sukhinder Singh Cassidy has defended her pay packet of more than $23 million – which makes her one of the ASX’s highest paid chief executives - after investors delivered a stern rebuke at the company’s annual general meeting last month.

Singh Cassidy, who is based in San Francisco, became chief executive of Xero in February 2023, following stints at Google, Amazon and e-commerce platform Joyus. Xero’s share price has climbed under her leadership, but the executive’s Silicon Valley-sized salary has served as a lightning rod for criticism amid difficult economic conditions and cost of living pressures.

Xero chief Sukhinder Singh Cassidy. The company’s investors delivered a strong rebuke against the company’s executive pay at last month’s AGM.

Her target remuneration of $US15.2 million ($23.5 million) is mostly made up of share-based incentives, and are in addition to a one-off grant of 575,000 share options, worth about $US26.5 million.

It puts Singh Cassidy in a rare and elite class of highly paid ASX executives set to earn $20 million or more, including ResMed boss Mick Farrell ($20 million), News Corp chief executive Robert Thomson ($41.9 million), Goodman Group chief executive Greg Goodman ($26.8 million) and Macquarie Group chief executive Shemara Wikramanayake ($29.8 million), according to data from the Australian Council of Superannuation Investors.

The pay package has put Singh Cassidy at odds with proxy advisory firms Institutional Shareholder Services and Glass Lewis, who each voted against Xero’s remuneration report at its most recent annual general meeting. ISS called out what it described as “problematic pay practices” that were out of line with the Australian market and “inconsistent with good corporate governance expected among large ASX-listed entities.”

ISS also raised issues with a one-off bonus awarded to Xero’s new chief financial officer, Claire Bramley, which was 26.5 times her annual base salary.

Nearly half of the votes cast at Xero’s AGM in August rejected the remuneration report, a revolt against Singh Cassidy’s salary and a warning shot to the board that the pay is out of step with expectations. The rebuke was largely symbolic: Xero is New Zealand-based, meaning it is not bound by the ASX’s “two strike” rules. The company’s board has defended the pay as being necessary to attract top-tier global talent.

Speaking to this masthead ahead of Xero’s annual Xerocon event in Brisbane, Singh Cassidy said that her remuneration was a matter for Xero’s board, but that it was structured in a way that delivered value to shareholders.

Xero, which was founded in New Zealand in 2006, produces cloud accounting software and its Xerocon summit is sometimes dubbed “Coachella for accountants”. The company used its flashy event to announce a range of new AI features and detail its plans to grow in the lucrative US market, thanks to a $US2.5 billion acquisition of payments platform Melio. Xero has long struggled to crack into the US, where rivals like Intuit remain dominant.

Xero’s chairman, former Telstra chief executive David Thodey, told the meeting that remuneration was a “complex issue” but that the current structure was the right one for the company.

If Xerocon is “Coachella for accountants”, Singh Cassidy is its headline act.

“I feel like my primary job is to drive value for Xero,” she told this masthead.

“And you know, we worked with the board and shareholders to drive a package that’s highly aligned with shareholder value. And I think like an owner. I wake up every day, I think like an owner, and I feel like my package reflects that same alignment of interests.”

At the AGM last month Xero director Susan Peterson, chair of the people and remuneration committee, said that she and chairman David Thodey had held more than 50 meetings with investors and proxy firms to discuss its new remuneration approach.

Some 96 per cent of Singh Cassidy’s pay package is performance-based or linked to share price performance, she said, which is in line with Silicon Valley norms. She argued the package was necessary to attract and retain global-calibre leadership in a highly competitive market.

“Long-term equity is tied to tenure, and is a standard and widespread component of remuneration in the US technology sector,” Peterson told investors.

“The ultimate value of [the equity] is tied to Xero’s share price performance, which makes it meaningfully aligned to long-term shareholder value creation.”

“In the past we have tried to secure global talent on remuneration structures that have been tied to Australian pay practices ... It is mission-critical to pay local market rates if we want to secure a grade talent with the experience needed to prosecute the strategy.”

Xero’s chairman, former Telstra chief executive David Thodey, told the meeting that remuneration was a “complex issue” but that the current structure was the right one for the company.

The bulk of Singh Cassidy’s pay package is performance-based or linked to share price performance.

“As one of the few truly global SaaS [software-as-a-service] companies on the ASX, securing leadership in a competitive international market is essential to creating long-term shareholder value,” Thodey said.

“This framework … is necessarily different from many ASX-listed entities and is a deliberate consequence of our strategy and global ambition.”

In Brisbane, Xero showed off JAX, its so-called “financial super agent” which launched in prototype earlier this year. JAX stands for ‘Just Ask Xero’.

‘We worked with the board and shareholders to drive a package that’s highly aligned with shareholder value. And I think like an owner. I wake up every day, I think like an owner, and I feel like my package reflects that same alignment of interests.’

Xero chief Sukhinder Singh Cassidy

Initially limited to creating invoices and answering basic support queries, JAX will now extend into automated bank reconciliation – the painstaking matching of customer transactions with bank feeds that sits at the heart of the Xero product – and users will be able to ask financial questions inside Xero thanks to a partnership with ChatGPT maker OpenAI.

Asked about the risks of businesses becoming too reliant on algorithms for critical financial decisions, Singh Cassidy stressed that customers would always remain “in control.”

“Yes, we can give you the idea that we’ll do it all for you, but often customers want to check what’s been reconciled,” she said.

“It’s about control, and ensuring customers know when something is being done on their behalf.

“We know customers need to trust us. That means minimising hallucinations, ensuring transparency, and always giving them an audit trail so they can see what the AI has done.”

Xero says 73 per cent of its customers already use some form of AI on the platform, and the executive acknowledged a portion remain hesitant.

“We don’t force it on people – they can choose,” she said.

“Our job is to keep exposing features in the product so they become familiar, while respecting that adoption has its own curve.”

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