Shareholders unleash Westpac whack with almost 65pc of investors inflicting first strike

Westpac investors have delivered a record-breaking rebuke with almost 65pc of shareholders voting down its pay report.

Westpac CEO Brian Hartzer. Picture: AAP

Westpac Bank has suffered a landmark strike today, with a mammoth 64 per cent of shareholders voting against its remuneration report.

In an announcement to the ASX on Wednesday evening, Westpac (WBC) revealed 64.16 per cent of shareholder votes were cast against the pay report. That exceeds the 62 per cent strike lodged against Telstra’s remuneration report in October and 61.5 per cent vote against AMP in May.

About 35.84 per cent of Westpac shareholder votes were in favour of the pay report.

The result was first flagged in Westpac chairman’s Lindsay Maxsted speech being delivered to investors today at the bank’s annual general meeting in Perth.

Mr Maxsted said while shareholders present at the meeting were yet to vote on the pay resolution votes already received showed “more than half will be against this resolution”.

“This means we will incur a first strike. This sends a strong message to the board,” he added.

“Feedback from shareholders has varied, but the key point from those voting against the remuneration report has been that although the board took events over the year into account, many have questioned whether we went far enough, particularly in reducing short term variable reward paid to the CEO and other executives.”

A strike occurs when 25 per cent of votes are cast against a motion to adopt the remuneration report. A second strike at the next AGM allows shareholders to vote on a spill motion that would force the board to face re-election.

Westpac is the first of the big three banks — of those that have a September 30 year end — to face the wrath of shareholders. ANZ Bank and National Australia Bank have their AGMs next week, while Commonwealth Bank has a June 30 year end and didn’t face a strike this year after reducing executive bonuses to zero.

The banks are in the firing line following the explosive claims made in the Hayne royal commission, including sweeping scandals where customers and dead people were charged fees and received no service.

CBA was the first of the major lenders to be hit with a strike against its remuneration report in 2016.

Mr Maxsted cautioned shareholders not to read too much into the outcry that surrounded the royal commission’s hearings. The commission was focused solely on misconduct, and often on misconduct that the banks had self-reported and had already taken steps to fix.

“Given this context, we need to be mindful in generalising what the royal commission is finding and reporting, including across different organisations,” he said.

“There is also a risk that the misconduct raised at the royal commission may inadvertently come to define the culture of the sector. Speaking for Westpac, that is not the case. From that perspective, it is challenging for the royal commission to form a view on overall culture when, by its terms, it is focused solely on misconduct.”

Mr Maxsted nevertheless said that Westpac was taking royal commission process seriously.

He outlined four main lessons the bank had taken from the royal commission. These included not analysing customer complaints well enough and being too slow to act on complaints. Westpac also did not pay enough attention to non-financial risks, including conduct, compliance and reputation risks. Addressing one of the commission’s recurring themes, Mr Maxsted conceded that “some employee remuneration arrangements inadvertently contributed to poor behaviour”. Westpac had also underestimated the risks inside its financial planning business, he said.