CBA chief Ian Narev in $12.3m pay bonanza

CBA boss Ian Narev has received a 50 per cent pay rise to make him the nation’s highest-paid big four banker

Commonwealth Bank chief executive Ian Narev.

Commonwealth Bank boss Ian Narev has received a 50 per cent pay rise to make him the nation’s highest-paid big four banker, taking home $12.3 million despite a series of scandals at the bank that have helped fuel calls for a royal commission into the entire banking sector.

Mr Narev’s hefty bump in total received remuneration — a figure which includes previous awards that vested during the year — is likely to fuel further popular resentment against the banks because it comes at a time when wage growth for the rest of Australia has dropped to its slowest pace in 18 years.

And while Australia’s largest company last week declared a record cash profit of $9.45 billion, shareholders witnessed a second half in which profits fell in every division of the bank except the retail arm, which writes mortgages.

Opposition spokesman for consumer affairs Sam Dastyari, a persistent critic of Australia’s big banks, contrasted Mr Narev’s bulging pay packet to the fate of victims of CBA’s financial planning and insurance scandals.

“Mr Narev should be very pleased with himself, and there’s a long list of scandal victims (that I can happily provide him with) that he can share it with,” he told The Australian.

“Some of these people have been waiting for years for their compensation.

“I really do feel like we’re living in the 1980s film Wall Street.”

On a statutory basis, Mr Narev’s pay packet increased a more modest 5.4 per cent to $8.77m for the 2016 financial year. The profit revealed last week was up 3 per cent year-on-year.

“You will note that the CEO’s total remuneration received during the 2016 financial year increased significantly from last year,” said David Higgins, who chaired a committee that reviewed CBA’s remuneration ­arrangements during the year. Mr Higgins said the hefty rise in Mr Narev’s remuneration was due to equity awards through the bank’s Group Leadership Reward Plan for the four years through mid-2015, which vested over the last year.

“Next year’s report will show significantly lower GLRP vesting,” Mr Higgins added.

Even so, the latest pay packet put Mr Narev way ahead of rival bank bosses. Former ANZ chief executive Mike Smith was paid $7.6m in his last full year at the bank, while Westpac chief executive Brian Hartzer was paid $5.7m, but that was for a part-year in the role. Nicholas Moore, who heads investment bank Macquarie Group, was last year paid $16.5m.

CBA paid a total of $44.8m to its executives for the 2016 financial year, about half in cash.

Mr Higgins said the bank’s executives had received modest fixed remuneration increases — less than 1 per cent on average. Interestingly, Mr Narev’s fixed remuneration did not rise during the period, and there was no increase to board and committee fees during 2016.

Earlier this month CBA, along with much of the sector, withheld almost half of the RBA’s 25-basis-point reduction to the cash rate, sparking intense criticism of the industry from the government and the opposition. At the same time, CBA and its rivals pushed through higher rates on new term deposits. Other major and regional lenders, which also declined to pass on the rate cut in full, cited higher funding pressures.

Mr Narev has argued he was balancing the needs of CBA’s two million home loan customers with its 11 million depositors and its 800,000 direct shareholders, who relied on the bank’s profitability for a sustainable dividend.

Following the banks’ failure to pass on the rate cut, the Turnbull government has announced a requirement that the bank chiefs attend a committee hearing at least once a year in Canberra. However, opposition MPs are continuing to attempt to build support in parliament for a motion calling on Malcolm Turnbull to establish a royal commission into the sector.

CBA’s outgoing chief risk officer, Alden Toevs, and chief financial officer David Craig were the next highest remunerated executives at the bank, both receiving more than $6m each during the year. On a statutory basis, both men took home more than $4.5m over the year.