Chief executives' salaries and bonuses should be set around their value to investors and not based on their predecessors' or global benchmarks, AMP believes.
In its latest corporate governance report, AMP Capital, reported that the average chief executive of an S&P/ASX200 company was paid more than twice what the next most senior executive received in 2015.
AMP Capital corporate governance manager, Karin Halliday, said that on average "key" S&P/ASX200 executives earned $1.4 million — excluding the chief executive.
"Chief executives deserve to be paid a premium for running a listed company in Australia as every facet of their role is crucial to investors," she said.
"As investors, we are particularly interested in the board's rationale for the size and composition of executive pay.
"Executive remuneration should be weighted towards being a fair payment for the role for which the executive has been hired. We look for evidence that executive pay is reasonable and aligned with shareholder interests.
"We recognise the challenge of setting pay, particularly when a new chief executive begins. We encourage companies to set executive pay with reference to the value the executives provide rather than simply allowing past payments or global benchmarking studies to determine future payments."
Halliday added that the report found that more than one in five boards of S&P/ASX200-listed businesses did not have a female member, noting that companies that had not embraced gender diversity were more likely to experience governance issues.
"AMP Capital believes there is a sound business case for improving gender diversity," she said.
"In addition to demonstrated links between performance and the number of women on a board, we have found that when companies have more women directors, they present fewer characteristics of poor governance."
Data from the 2015 Money Management Salary Survey found that remuneration packages for chief executives and directors within the financial services sector tended to be significantly more modest, with 92 per cent of respondents reporting they took home less than $500,000.