When it comes to executive pay, generalisations often rule the discussion. It may surprise many, but executive pay, while still very lucrative for those who receive it, hasn’t been rising. Since the global financial crisis, it hasn’t kept pace with inflation.

In 2011, average total pay in the ASX100 declined 8.9% to $3.055 million as bonuses declined, according to a report released yesterday. However, if we take the past 10 years into account, it grew twice as fast as earnings and more than three times as fast as inflation.

This means the rapid rise in executive pay for our largest companies has been halted (at least for now) by the global financial crisis, without which it might have continued its upward climb.

That’s one of many conclusions that can be drawn from the survey of executive pay of the CEOs of Australia’s 200 largest public companies, conducted by corporate governance firm Ownership Matters for the Australian Council of Super Investors. The report was compiled from 2011 data, the last year for which complete company records are available, and thus doesn’t take into account this year’s bonus refusals by high-earning CEOs such as BHP’s Marius Kloppers, Qantas’ Alan Joyce and BlueScope Steel’s Paul O’Malley.

Even before this year, bonuses were falling, the report found. In 2011 the average bonus in the ASX100 fell 2.1% to $1.098 million — the lowest average bonus since 2003. The report said this was due partly to the retirement of executives such as Leighton’s Wal King and Westfield’s Frank Lowy, who received bonuses of $10.298 million and $7 million respectively the year before.

CEO pay is notoriously complex — including base pay, cash bonuses, share options, shareholdings —  but across all of these measures, it is either growing at a rate less than inflation, or falling.

Why aren’t companies screaming this from the rooftops when their CEOs are attacked for their pay packets? Maybe because making a few million dollars still puts executives among the best-paid 1% of the world’s population. Or maybe it’s because people associate expensive executives with quality. Who wants to say their CEO came cheap?

The moderation in executive pay growth is caused by boards listening to shareholders, and is a positive thing, says corporate governance expert Dean Paatsch, a co-founder of Ownership Matters.

In February 2007, the S&P/ASX200 had reached 6000 points just before the GFC. It has yet to recover, sitting in recent weeks just below 4400. Long-term investors, many out of pocket, are less likely to stomach executives receiving pay out of line with a company’s fortunes, and for the past two years, they’ve had a compulsory formal mechanism with which to register their displeasure.

The two-strike rule, effective from July 2011, makes shareholders vote on a company’s remuneration report, with two strikes of 25% of more shareholders in dissent for two consecutive years triggering an automatic spill motion on the company’s entire board (i.e. a vote to keep or ditch a company’s directors). Several companies, including Crown, Pacific Brands and GUD Holdings, received first strikes in 2011. None have received a second so far.

The renewed focus on CEO pay from shareholders is not confined to Australia. In Britain this year, shareholders in seven listed companies have voted down remuneration reports, forcing out CEOs such as insurance company Aviva’s Andrew Moss, media company Trinity Mirror’s Sly Bailey, and David Brennan, the head of pharmaceuticals giant AstraZeneca. Just five days ago, UK shareholders voted down the remuneration report of electrical retailer Darty, in dissent over the payout given to an outgoing chief executive three years ago. In England at least, shareholders are terrifying boards into holding pay at bay.

And in America, CEO pay has been falling for some time. A recent study by Steven Kaplan, from Chicago’s Booth School of Business, found the pay packets of America’s top CEOs have declined markedly since 2000. CEOs in the American S&P500 had their pay shoot up between 1993 and 2000, but since then it’s been falling. In 2010, Kaplan found, CEOs were paid as much in real terms as they were in 1998. In 2010, America’s top-paid CEOs got 200 times the median American household income, down from 350 times in 2000.

Executive pay is complex, and the picture in Australia is nuanced, as yesterday’s study makes clear. For one thing, while most Australian executives had take-home pay in line with in the annual report, several executives earned far more than is clear by looking at their reported pay packets, once things such as equity (typically awarded in the form of options) are taken into account. Options are the ability to purchase shares at a certain price at a later date, and are awarded several years before they vest, meaning it can be difficult to assess their value at the time they are granted.

Aquila Resources’ Tony Poli is singled out in the study for taking home $169.4 million despite his official stated pay only amounting to $572,000. His return was boosted by several waves of options he was issued from 2005. The most lucrative was 5 million shares, then valued at $2.15 million, awarded in 2005. As Aquila’s share price soared, they vested in 2007 for a hundred times that amount ($238 million).

Such divergence between stated pay and actual pay has always existed to some extent, Paatsch says, and is difficult to detect. And there’s no requirement to disclose the amount options are actually worth upon vesting in annual reports.

“You have to go back and do the sums to figure out if the board is striking a commercial bargain,” he said. “There’s always an element of sorcery in forecasting valuations in any equity investment. The only thing you know for sure is the value when the options vest.”

*This article was first published at LeadingCompany