Bank CEO asked for a pay cut

ANZ’s board cut three executives’ pay, despite Shayne Elliott defending them. He then asked his pay be cut too.

ANZ CEO Shayne Elliott leaves the banking royal commision in Melbourne. Picture: AAP

The David Gonski-led ANZ board dealt three top executives pay cuts over the bank’s scandals this year, despite CEO Shayne Elliott’s efforts to defend them, leading him to request his pay be cut to be in line with the team.

The boardroom power play over pay was revealed yesterday at the Hayne royal commission, as were plans by ANZ to shake up its pay structure for frontline and rank-and-file staff by moving away from bonuses.

On executive pay, a series of emails tendered to the commission showed the pay negotiations as the bank’s executive team and board struggled to deal with the fallout from the royal commission and other scandals.

Giving evidence yesterday, Mr Elliott admitted he was one of four executives who had their bonus cut for conduct and compliance failings related to the commission. The names of the other three have been suppressed.

In a September 13 email to ANZ’s general manager of remuneration, Margot Dargan, which redacted names, Mr Elliott said after a lot of thought he was “not recommending” the bonus cuts recommended by Mr Gonski’s board.

“At 70 per cent of target (name deleted) will have the lowest rating of any full year Exco (executive committee) or MB (management board) member in at least 10 years,” the email said.

“I believe the board’s assessment of (name deleted) is harsh and not based on actual performance but rather an intuitive feel.”

However, the board pressed on with its plan to slash bonuses and just over a month later Mr Elliott took the step of emailing Mr Gonski to ask that his pay reflect a similar cut as his team and the overall staff bonus pool, reflecting his ultimate accountability for ANZ: “I feel it’s very important that my own remuneration is no higher than this. It’s about unity, accountability and frankly credibility — externally but even more importantly, internally.”

The commission has suppressed the names of the three executives whose pay was reduced over compliance and risk issues — ANZ’s corporate euphemism for scandals and customer rip-offs — but the bank’s annual report shows no senior executive received their entire bonus.

Mr Elliott’s bonus tumbled from $4.1m to $3.15m, chief financial officer Michelle Jablko’s was cut from $2.24m to $1.75m and institutional boss Mark Whelan’s was slashed from $3.275m to $2.175m.

The bonus paid to deputy chief executive Alexis George ­increased from $913,000 to $1.075m, but the figures are hard to compare because for the majority of the year she was in her previous job, head of the trouble-prone wealth division.

On a percentage basis she received the lowest bonus of anyone on the ANZ management team, at 61 per cent of her target and just 41 per cent of the maximum possible.

“We now have a new executive team running the bank. However, accountability for our failures is still reflected in this year’s remuneration of our most senior team including our chief executive officer,” Mr Gonski said in the report.

Mr Elliott said a plan to increase fixed remuneration for ANZ staff and reduce bonuses, presented to him in August, was “a view not yet implemented or even agreed” but he hoped it would be in place by next financial year.

He said in the past ANZ believed “that high performing organisations needed to have high degrees of variable remuneration”.

“I think what we have learnt is that it is flawed in an organisation like ours where we require far more collaboration and teamwork to achieve good outcomes ... so we feel we’ve become too reliant on variable remuneration.

“Our people tell us the same. That they feel it exposes them to uncertainty and risk.

“We need to take this off the table and get our people focused on doing the right thing.”

ANZ’s position is in contrast to that expressed by chief executives of his major rivals who have all, during their time in the witness box, defended bonus payments and variable pay for frontline staff.

“My inkling is ANZ has made people more accountable,” a fund manager said yesterday on the basis of anonymity. On the potential change to bonuses at ANZ, he said it may prompt the bank’s rivals to follow.

“It sounds like what they are doing is where everyone will move,” the fund manager said.