CBA’s pay play with reform bid to placate shareholders
THE Commonwealth Bank is introducing “trust and reputation” as a key pay hurdle for executives as it seeks to placate shareholders ahead of its annual meeting in November.
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THE Commonwealth Bank is introducing “trust and reputation” as a key pay hurdle for executives as it seeks to placate shareholders ahead of its annual meeting in November.
Documents released to investors yesterday detail the reform measures, which were overseen by chair Catherine Livingstone.
The CBA is trying to convince its institutional and 800,000 retail shareholders not to deliver a “second strike” against its executive remuneration report — a move that would potentially culminate in a boardroom spill.
Under its new executive pay policy, 75 per cent of long-term bonuses will be based on shareholder returns relative to banks of a similar size on the Australian Securities Exchange. Ms Livingstone has also introduced a new hurdle, with 12.5 per cent now linked to “trust and reputation”.
Success on that front will be measured independently by an external company, the bank says, and benchmarked against 16 other ASX-listed companies. The other 12.5 per cent will be tied to targets around employee engagement.
Ms Livingstone said that at the annual meeting, she would update shareholders “to the extent possible” on allegations the bank breached money-laundering laws, noting the matter was before the courts.
The federal government’s anti money-laundering authority, Austrac, last month launched civil action against the CBA in the Federal Court. It accused the bank of “serious and systemic” legal breaches involving more than 50,000 transactions.
The CBA last year became the first of the big four banks to be hit with a “pay strike” from investors, where at least 25 per cent of votes are lodged against a company’s remuneration report at its annual meeting.
Under Australia’s corporate law, investors who deliver pay strikes in consecutive years can vote for a spill of the board.
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