Yahoo Finance ‘We tried, but we got it wrong’: NAB, ANZ, Westpac forced to slash exec pay further
NAB and ANZ investors have joined their Westpac counterparts in exercising their shareholder power by pushing back against pay structures that would see c-suite bank executives’ pay packets slashed, but still retain some bonuses.
Addressing disgruntled shareholders at the annual general meeting of Australia’s fourth-largest lender on Wednesday, NAB chairman Ken Henry acknowledged that more than 80 per cent of investors would vote against the bank’s executive pay proposal.
“The board is hearing loud and clear that our new scheme is not right,” Henry said.
“We tried, but we got it wrong, We are listening to you. We will try again.”
Major banks are still reeling and facing backlash after a year of damaging misconduct revelations from the Royal Commission into the banking and finance industry has rocked the sector.
Billions of dollars have been wiped off the value of Australia’s big banks this year as the public inquiry exposed a greed-driven culture in which staff were incentivised to mislead customers.
Louise Davidson, CEO of the Australian Council of Superannuation Investors, said the “unprecedented” size of NAB shareholders’ vote against the remuneration report reflected that investors were taking issue with the payment of executive bonuses in a year of “systemic breaches of the law” and “mistreatment of customers within the banks”.
“Reducing short-term bonuses, rather than zeroing them, was a hollow gesture and failed to meet investor and community expectations about accountability,” Davidson said.
All the big four bank CEOs are facing major haircuts to their pay packets, with NAB slashing chief executive Andrew Thorburn’s pay by $2.073 million.
But today’s AGM demonstrates shareholders are agitating for bank executives to accept even lower pay packets.
What’s been happening with the other banks?
The protest vote follows a similar move by Westpac shareholders last week to reject its executive remuneration report, which was opposed by owners of nearly two-thirds of the company’s shares.
Westpac CEO Brian Hartzer’s pay packet was to drop by 11 per cent or $600,000, but was still set to take home a cool $4.9 million.
NAB, like Westpac, will now be at risk of a second strike and a board spill next year.
ANZ will also follow its rivals in copping a first strike on executive pay, with about a third of shareholders voting against the lender’s remuneration report.
ANZ chairman David Gonski told Wednesday’s AGM in Perth that 34 per cent of early votes went against ANZ’s remuneration report, meaning the lender follows rivals Westpac and NAB in suffering a first strike.
“The board acknowledges the very real concerns of those who have voted against the report and I assure you we will continue to work hard in 2019 to ensure further alignment between compensation and shareholder interests,” Mr Gonski told the AGM.
Although the scale of the shareholder revolt fell far short of those at Westpac and NAB, the proportion of votes against the remuneration report was still comfortably above the 25 per cent required for a first strike.
The trio now face the possibility of a second strike and a board spill at next year’s AGM.
While larger rival Commonwealth Bank of Australia received a first strike in 2016, it escaped a second strike as it held its AGM in September.
—with wires
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