Top bankers forfeit $100m in bonuses over blunders

CBA’s run of governance disasters has blown a gaping hole in Ian Narev’s pay, with the former CEO forgoing up to $16m.

Former CBA chief executive Ian Narev. Picture: Hollie Adams

The Commonwealth Bank’s run of governance disasters has blown a gaping hole in Ian Narev’s pay, with the former chief executive forgoing up to $16 million as a result of the bank’s multiple money-laundering transgressions and the Australian Prudential Regulation Authority’s damning report on the group’s culture.

News of bonus windbacks came as CBA yesterday announced its first profit decline since the financial crisis in 2009 — a 4.8 per cent fall to $9.23 billion, driven by the $700m penalty incurred as a result of the Austrac money-laundering charges.

CBA’s annual report revealed that 2018 remuneration for all employees including non-executive directors was slashed by more than $100m over the 2017 and 2018 financial years.

It was Mr Narev who suffered the biggest hit after leaving the bank on April 9 and taking a period of gardening leave until June 30.

The former chief executive’s maximum pay for last year will be just shy of $6m, including a pro-rata cash component of $2m and up to $3.98m for the value of share rights.

Against that, Mr Narev had to give up a $2m short-term bonus and $13.9m in long-term performance rights.

The Austrac debacle precipitated a clean-out of the bank’s senior executive ranks, with Mr Narev handing the chief executive’s baton to retail banking boss Matt Comyn.

In the new, straitened environment, the target remuneration of Mr Comyn has been slashed 17 per cent to $8.4m compared with $10.1m for Mr Narev.

The main difference is a reduction in the maximum, long-term bonus from $4.8m to $4m.

In setting Mr Comyn’s remuneration, CBA said in the ­annual report that it had taken into account the pay of market peers and “broader stakeholder and community expectations”.

Chairman of the CBA board’s remuneration committee David Higgins said in a letter to shareholders that the board and Mr Narev had agreed that the former CEO would not get any short-term variable pay this year or any of his unvested long-term variable remuneration.

Other former executives to suffer adverse outcomes were ­former chief financial officer David Craig, his now-departed successor Rob Jesudason, former chief risk officer Alden Toevs, and former wealth chief Annabel Spring. Mr Craig forfeited up to $6.4m in long-term variable remuneration, while Mr Jesudason’s penalty was up to $7.1m, Mr Toevs’s was up to $4.4m, and Ms Spring’s was up to $653,000.

“In making these decisions, the committee and board were determined to address fully past performance issues identified for former and current executives, and focus their efforts on becoming a stronger, better bank,” Mr Higgins said. The amounts surrendered, he said, reflected a number of decisions by the board.

First, the short-term bonuses for current and former group ­executives was slashed by 20 per cent.

Second, about 400 current and former executive general managers and general managers forfeited part of their deferred short-term variable pay, and third, select former group executives gave up their entire long-term variable remuneration.

The annual report revealed Mr Jesudason forfeited his entire short-term bonus target.