NAB sidelines Ken Henry as Andrew Thorburn takes $22m hit on the way out

Andrew Thorburn will walk away from a potential fortune at NAB, with Ken Henry sidelined in selecting his replacement.

Outgoing NAB chairman Ken Henry (left) and departing CEO Andrew Thorburn. Picture: David Geraghty.

NAB chief executive Andrew Thorburn will be paid more than a million dollars to walk away from the troubled bank at the end of the month, but will forego a potentially vastly larger $22 million payout by being no longer eligible for performance-related payment rights.

Meanwhile outgoing chairman Ken Henry will be sidelined in the process that selects Mr Thorburn’s replacement, the bank has revealed.

Mr Thorburn and Mr Henry had been under immense pressure to step aside since being singled out by financial services royal commissioner Kenneth Hayne in his landmark final report, which was made public at the start of the month.

Commissioner Hayne took swipes at Mr Thorburn and Dr Henry for their appearances at the royal commission. “Having heard from both the CEO, Mr Thorburn, and the chair, Dr Henry, I am not as confident as I would wish to be that the lessons of the past have been learned,” he said.

“More particularly, I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly.”

On February 7, just three days after the Hayne royal commission’s final report was publicly released, the bank announced both men would leave the company.

“Exit arrangements for outgoing group CEO Mr Thorburn has resigned and will finish at NAB on 28 February 2019,” NAB said in a statement on Wednesday.

“In accordance with his contractual entitlements, Mr Thorburn will receive payment of $1,041,449 in lieu of 26 weeks’ notice, along with accrued leave entitlements. All Mr Thorburn’s unvested deferred awards will be forfeited in accordance with plan rules.”

But the pressure exerted by the royal commission, on NAB’s failings and lack of accountability, means Mr Thorburn will forgo a much bigger golden handshake.

As well as the circa $1m termination payment, Mr Thorburn had been eligible to pocket $22m in potential performance rights that he will now forego.

NAB also said that it had established two committees to select its new CEO and chair, saying that Dr Henry would not be a member of either committee.

“The chairman selection committee will be chaired by NAB director David Armstrong and the CEO Selection committee will be chaired by NAB Director Ann Sherry,” NAB’s statement said.

“The chairman will not be a member of either committee. Global search firms will support both committees, which will make recommendations for the NAB.”

Meanwhile acting CEO Phil Chronican will formally take the reins at the bank on March 1. He will be paid $150,000 per month (the equivalent of $1.8m a year) during his temporary tenure, which will expire once the committee selects the new CEO.

“Mr Chronican will not be eligible for any variable remuneration, nor will he receive non-executive director fees while in the group CEO position,” NAB said.

CLSA banking analyst Brian Johnson said shareholders would be happy with the result around Mr Thorburn’s pay and Dr Henry’s exclusion from the CEO selection process.

“Hayne was really about accountability and this is what has happened today,” he said.

Mr Johnson said he viewed Mr Chronican as the leading candidate to eventually take over as chairman, but he also could stay on as CEO.

NAB said global search firms would support both board committees, by making recommendations on potential CEO and chairman appointees.