Shareholders in ANZ yesterday joined their peers in rival Westpac (WBC) in giving their board and senior management a towelling over remuneration for senior executives.
Westpac shareholders last Friday registered a significant protest vote at the way the bank worked out its remuneration with a 16.5% vote against its remuneration report.
That followed claims the Westpac board had protected bonuses with a favourable (to the executives) accounting treatment of software write-downs.
Yesterday ANZ shareholders made it clear they were unhappy with their bank’s remuneration policies.
Shareholders lodged a significant protest vote against the bank’s remuneration policies amid concerns about the amount paid to outgoing CEO Mike Smith for this year – around $10.8 million.
A resolution on the remuneration report was passed with 15.47% of shares cast against it. A handful of shareholders abstained. For a first strike to be registered 25% or more of the shares have to vote against the remuneration report.
Mr Smith’s total pay for 2015-16 will be around $10.8 million, or $4.5 million more than his successor Shayne Elliott will receive when he starts his new role next month.
ANZ shares are down more than 28% from its 2015 peak in the first half of this year, and that is not going down well with the shareholder base. ANZ shares clawed back more than 2% of that loss yesterday with a solid rise to $26.60 in the wake of the Fed’s first rate rise since 2006.
ANZ 2Y – Underperforming ANZ faces shareholder backlash
The shareholder disquiet about executive pay meant a rough meeting for ANZ chairman David Gonski who had to issue a few mea culpas to the meeting.
He admitted the ANZ has to work hard to regain customers’ trust following a string of mistakes. The ANZ though is not alone – Westpac, the NAB and the Commonwealth have all been caught up in problems involving financial advice, overcharging, accounting mistakes and other problems that have seen customers short-changed or out of pocket.
ANZ alone has refunded more than $40 million this year after failing to pay some customers enough interest or carry out annual financial adviser reviews.
“I acknowledge that many people in Australia don’t like banks," Mr Gonski told the annual general meeting.
"Australians should have high expectations of their banks and I know that we need to continue to work hard to have the respect and trust of our customers and of the wider community.
"We have made mistakes over the years. The key is for us to own up to our mistakes, fix them and learn from the experience."
Mr Gonski also reiterated ANZ’s strategy is to focus on improved returns in Asia-Pacific ahead of growth:
"We are managing our business for these less heady and more volatile times," Mr Gonksi said.
"Having worked hard to establish our international footprint over the past eight years, we will continue to evolve our strategy in Asia.
"This will involve simplifying our partnership investments and focusing on businesses where we have a winning position. It will also see us emphasise improved returns in Asia-Pacific ahead of growth,” Mr Gonski said.
That was also a point that the retiring CEO Mike Smith said would be a prime task for his successor. He said the bank’s strategy would “continue to evolve” under its next leader.
“The immediate focus for the management team is in three key areas – improving returns, controlling costs, and managing credit quality,” Mr Smith told the meeting in Adelaide.
And Mr Elliott backed the bank’s current strategy and said Mr Smith was leaving the bank in a strong position for change. After meeting with customers and shareholders in recent months, he said it was clear the bank needed to adapt to changes spanning from technology to customer expectations (he would say that though).
The ANZ earned a record $7.2 billion in 2014-15, but the second half saw a slowdown and it was forced to abandon the long held target to lift return on equity to 16%.
