NAB board humiliated for executive pay ‘cluster fiasco’

“We tried, but we got it wrong. We are listening to you. We will try again,” Dr Henry said to a packed auditorium at the Melbourne Exhibition Centre.

Dr Henry revealed there is “intense debate” among the banks’ three largest shareholders, BlackRock, State Street and Vanguard, over the best way to pay senior bankers.

‘Situation at NAB is a cluster fiasco’

Governance expert Dean Paatsch of Ownership Matters was scathing of the bank saying it was not just the structure of the proposal but also the board’s decision to award bonuses to all executives.

“The situation at NAB is a cluster fiasco. It is a failure of both design and implementation,” Mr Paatsch said.

Louise Davidson, chief executive of the Australian Council of Superannuation Investors, which provides proxy advice to 33 Australian funds with more than $647 billion, was equally critical of the bank.

“Reducing short-term bonuses, rather than zeroing them, was a hollow gesture and failed to meet investor and community expectations about accountability,” Ms Davidson said.

Dr Henry said he was embarrassed by the massive protest vote and would have to consider a structure that allowed for no bonuses to be paid. Mr Thorburn said he supported making executives, including himself, accountable.

“I have no problem with zero bonus if that’s what the board felt was necessary,” Mr Thorburn said.

After the meeting Mr Thorburn was questioned on his sudden decision to take extended leave from the bank, which was announced earlier this week and raised speculation over his future.

“I’ve been a little perplexed and maybe amused that people are so interested in my leave,” he said. “I’ve been CEO of the bank for four years. I’ve given everything. I love the bank. I believe in what I am doing. It’s been tough.

“I said to Ken at the start of this year I’d like to look at my long service leave.”

Dr Henry said: “Listen, he’s only got four weeks long service leave. We’re not going to let him have too much to re-energise, but we do want him to re-energise.”

The bank will consult with stakeholders and will await the release of Commissioner Kenneth Hayne’s final report and an APRA report into remuneration at financial services institutions before attempting to revisit the proposal, Dr Henry told the meeting.

Investors ‘fallen apart in acrimony’

He also indicated there was no clear way forward after a meeting with the big institutional investors, who are looking to solve the remuneration puzzle, broke down after what he described as violent disagreement.

“There’s a group that has been meeting quarterly over the last 18 months … it’s fallen apart in acrimony,” he said.

It was a more contrite NAB chairman who fronted the AGM than the one who appeared at the Hayne royal commission last month. Dr Henry even poked fun at himself during the 4½-hour meeting.

“I said to my wife, you saw it all, did you think I was being pompous? She said ‘No, but you certainly can be’,” Dr Henry said.

There was no lightening of the mood when shareholder after shareholder grabbed the microphone to give Dr Henry, the board and the executive team both barrels over the scandals at the bank and the corresponding share price.

Australian Shareholders Association representative Dennis Shore articulated the mood of the shareholders when he said the only appropriate bonus was zero.

“The buck has to stop somewhere,” Mr Shore said. “There is something fundamentally flawed when senior executives can be rewarded handsomely when there is negative TSR [total shareholder return].”

These feelings were hammered home again and again by the shareholder who berated Dr Henry for destroying billions of dollars and the taxi driver who said an executive making $1000 an hour didn’t deserve a bonus.

Dr Henry declined to answer any questions about the procurement scandal at the bank that saw NSW Police establish Strike Force Napthali and raid four properties including the home of former NAB chief of staff Rosemary Rogers last week.

“With the respect to The Human Group matters, you asked about kickbacks, I cannot answer them without prejudicing the investigation by NSW Police and I won’t do it,” Dr Henry said.

NAB board papers from May revealed that Dr Henry was questioned by the board about first class travel booked to the US by Ms Rogers for him and his wife outside the company guidelines in October 2016. The papers reveal that Dr Henry was “disappointed and frustrated” by the events.

The board papers, released by the Hayne royal commission, also reveal that first class travel taken by Mr Thorburn between 2016 and 2018 was approved by the board in the aftermath of the internal investigation.

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