Industry funds flex investor muscle on bank bonuses

20 December 2018
| By Mike |
image
image
expand image

The major industry superannuation funds who are members of the Australian Council of Superannuation Investors (ACSI) have used their voting power in delivering first strikes to the remuneration reports of both National Australia Bank and ANZ.

The industry funds are also considering whether the rules around bank executive remuneration should be changed to ensure the views of investors were implemented before bonuses were actually paid.

ACSI chief executive, Louise Davidson issued a statement today stating investors had sent a strong message to the boards of the two banks which had joined Westpac in receiving first strikes against their remuneration reports.

She noted that investors in NAB had registered the highest-ever vote against a remuneration report, with more than 88 per cent of shareholders voting to oppose the report.

“The unprecedented size of the vote against the NAB remuneration report reflects the fact that investors take issue with the payment of executive bonuses in a year when the Royal Commission highlighted systemic breaches of the law and mistreatment of customers within the banks,” she said.

Davidson said ACSI had been expressing concern for some time about the NAB’s new incentive structure and welcomed the decision announced by the Chair Ken Henry to rethink the scheme.  

“However, it was the decision of the board to award such significant bonuses to the executive team that led to such a strong vote against the report,” she said. “Reducing short-term bonuses, rather than zeroing them, was a hollow gesture and failed to meet investor and community expectations about accountability.”

Davidson noted that ACSI supported the ‘two-strikes’ rule on remuneration but noted that it placed shareholders in a position of only being able to express a view on bonuses that had already been paid.

“Perhaps the time has come to consider whether shareholders should have a greater opportunity to prevent outcomes like this, through the introduction of a binding vote on pay.  For example, companies in the UK must give shareholders a binding vote on pay policy, and may not make any payments that are outside of that policy.”  

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 1 week ago
Kevin Gorman

Super director remuneration ...

10 months 2 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 2 weeks ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

1 day 17 hours ago

Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award....

2 days 8 hours ago

APRA data shows the CFMEU accounted for 28 per cent of super fund industrial contributions, with the shadow treasurer calling for a prompt investigation into the payments...

3 days 12 hours ago