National Australia Bank (NAB) has dodged a first strike over executive pay, but shareholders are unimpressed with moves to rein in bonuses as the bank’s UK business languishes.
Key directors survived a protest vote at NAB’s annual general meeting on Thursday as around 16.5 per cent of shareholders voted against the company’s remuneration report, falling short of the 25 per cent needed for a first strike.
Chief executive Cameron Clyne’s pay rose to $8.8 million last financial year and included almost $4 million worth of bonuses, despite the bank’s net profit falling 22 per cent.
NAB’s financial woes have largely been caused by losses from its troubled UK banking businesses.
In spite of the writedowns, chairman Michael Chaney insisted there had been a direct correlation between executive pay and the bank’s profit, with a dramatic reduction in short-term bonuses this year.
“Shareholders are concerned with one thing and that is how well a company does compared to other companies and NAB hasn’t done as well as some of its peers in recent years and that’s disappointing to the shareholders,” Mr Chaney told reporters after the meeting in Perth.
He said the board was conscious of the need to structure remuneration so that executives benefited when shareholders benefited.
In October, NAB reported its net profit for the year to September 30 fell to $4.08 billion from $5.22 billion in the previous year.
The result included almost $1 billion in bad debt, restructure and impairment costs in the UK.
Mr Chaney said the bank had spent a lot of time looking at disposing of its ailing British banks – Yorkshire and Clydesdale banks.
“We haven’t been able to do that under any sensible terms so we came to the decision that we should restructure them and make them into a small and more traditional-like bank,” he said.
NAB executives faced a barrage of questions and criticism on Thursday over executive pay and general underperformance in comparison to its Australian banking peers.
Australian Shareholders Association spokesman John Campbell said the performance rights did not sit well with the company’s results, which had been disappointing.
Shareholder Michael Fanning said he was concerned about the rejigging of short-term incentives following the performance of the UK banks.
“Hopefully these performance rights have factored in the writedowns and the relatively poor performance from the UK bank operations,” Mr Fanning told the meeting.
Mr Chaney, who was overwhelmingly re-elected as NAB chairman, tried to reassure shareholders about the bank’s executive pay, saying short-term bonuses had been lowered on account of the bank’s recent performance.
He also reaffirmed his support for Mr Clyne, saying he was doing a first class job.
Finance director Mark Joiner survived a significant protest vote against his board re-election following investor concerns that he was the only banking chief financial officer in Australia to sit on a bank board.
Mr Joiner told shareholders that while he had a “small number of external appointments” outside of his work at NAB, those extra duties took up almost none of his time.
NAB expects the restructuring of Yorkshire and Clydesdale banks to be complete next year.
