Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


NAB confirms huge first strike on exec pay

Morningstar with AAP  |  19 Dec 2018Text size  Decrease  Increase  |  
Email to Friend

National Australia Bank is scrapping its overhauled executive pay structure in response to an overwhelming first strike in which more than 80 per cent of shareholders voted against it.

Chairman Ken Henry has told the bank's annual general meeting that, while the final tally has not been made, more than 80 per cent of shareholders will vote against reforms that cut chief executive Andrew Thorburn's total pay by 32 per cent.

Dr Henry acknowledged that "the quantum of remuneration" was still a factor in the shareholder revolt.

"The board is hearing loud and clear that our new scheme is not right. We tried, but we got it wrong," Dr Henry told shareholders in Melbourne on Wednesday.

"We are listening to you. We will try again."

NAB (ASX: NAB), like rival Westpac (ASX: WBC), will now be at risk of a second strike and a board spill next year.

NAB's shares have fallen 22 per cent this calendar year and are at a six-year low.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

At 11am Sydney time, NAB was trading at $23.38, up 1 per cent. This is a 22 per cent discount to Morningstar's fair value estimate of $30.

Morningstar banking analyst David Ellis says NAB, Australia's leading business bank, continues to deliver operating momentum, particularly from core retail and business banking operations.

"The combination of top-line revenue growth and tight cost control will in the longer term drive better operational efficiency and underpin future profit growth," Ellis says.

Mr Thorburn, who will go on leave after Wednesday's annual general meeting, was paid $4.375 million for a year in which its full-year cash earnings fell 14.2 per cent and it owned up to poor customer treatment.

That was down from $6.448 million in the previous financial year, making his pay pay cut the largest among the big four bank chief executives in both percentage and absolute terms.

andrew thorburn nab royal commission misconduct

NAB chief executive Andrew Thorburn, on leave from today, earned more than $4m this year

Dr Henry said Mr Thorburn would return from annual leave by 1 February to lead NAB's response to the royal commission's final report, and then take long service leave.

Nonetheless, he said Mr Thorburn's future with NAB was secure.

"We have a clear plan for NAB and remain confident in our future under the leadership of CEO Andrew Thorburn and an executive team of truly global quality," Dr Henry said.

"We are now 12 months into a three-year strategy to transform the bank and we look forward to Andrew returning from leave rested and recharged to see through the transformation - and beyond."

Dr Henry said NAB had already decided to overhaul its pay structure before the royal commission heard widespread instances of wrongdoing from NAB and its peers, having identified the possibility is was "encouraging short-term thinking and value-destroying behaviours."

Dr Henry said he had been "appalled" by some of the wrongdoing exposed at the royal commission, and Mr Thorburn admitted banks had committed "terrible" misconduct.

"I know you have been disappointed and upset by issues of the past year," Mr Thorburn told shareholders.

"We have been too - we are determined to get better."

More than 64 per cent of Westpac shareholders voted against that bank's remuneration report last week, while ANZ holds its annual general meeting in Perth later on Wednesday.

Morningstar with AAP.

AAP logo

© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend