CBA faces large protest vote on pay

Ownership Matters has joined ISS in recommending against the bank’s remuneration report.

Commonwealth Bank customers use automatic teller machines (ATM) in Sydney, 06 Jun 2005 as the Reserve Bank of India announced the approval for CBA to establish its first Indian branch in Bangalore. AFP picTorsten/Blackwood ATMs logo logos electronic banking

CBA chair David Turner faces a big protest vote at his last annual meeting, with Ownership Matters joining ISS in recommending against the bank’s remuneration report and equity grant to chief executive Ian Narev.

Yesterday’s ASIC report into fees for no advice was the decisive factor because the bank had confided it was aware of the issue and made provisions for the snafu but wealth management chief Annabel Spring was the only executive to receive less than 100 per cent of her short-term incentive.

She was granted 95 per cent of her bonus even though 25 per cent of the award is based on so-called social issues, known as people and community.

CBA bases its awards on Roy Morgan customer satisfaction numbers, whereas NAB regards the numbers as of little value and prefers the net promoter score measure.

Ms Spring was paid a short-term incentive of around $933,000 on top of her turn-up pay of $1.1m.

This was split into $500,000 in cash, $170,000 in cash deferred and $263,000 in CBA shares awarded on a deferred basis.

Given wealth is where all the snafus have occurred, albeit some years before, one could argue the award of 95 per cent of targeted short-term pay was considered generous.

Chief executive Ian Narev received total pay of $12.3 million, or the same as 246 bank tellers, which included $6.6m in deferred equities based on performance over the last four years.

His fixed pay was $2.7m, while half his short-term incentive -- or $1.4m -- was paid this year with the other half to be paid next year, and there was also $1.6m deferred from the prior year.

There are also question marks over the valuation method used in awarding shares based on so-called fair value, which in this case says CBA shares are worth $47 a share based on a series of discounts known as the Monte Carlo method.

The stock is trading at $72.31 a share today and the VWAP at the time of the annual meeing notice was $77.30 a share.

This effectively means Narev gets more shares for the $2.6 million in value on offer.

The November 9 annual meeting will be Turner’s last before he hands over to Catherine Livingstone.