CEO Peter King contract extended to fix Westpac woes

Westpac’s recently appointed chief executive Peter King has warned Westpac’s turnaround will take several years, but he intends to see it through.

Westpac CEO Peter King. Picture: Nikki Short

Westpac’s recently appointed chief executive Peter King has warned Westpac’s turnaround will take several years, but he intends to see it through.

The comments came as the bank switched Mr King’s contract to an evergreen time frame, removing the existing two-year term.

The move suggests Mr King, the former chief financial officer of Westpac, is committed to a longer-term run at the bank. In September last year Mr King had flagged his intention to retire, but he took charge of the lender on an interim basis following the sudden exit of Brian Hartzer as an anti-money-laundering scandal engulfed the bank.

In April, Mr King was named in the role on a permanent basis under new chairman John McFarlane. At the time Mr King said he was delaying his retirement to provide stability for the bank.

Mr McFarlane on Friday said the board and Mr King had discussions and the CEO confirmed he was committed to a “multi-year plan to turn the bank around”.

“Reflecting these discussions his employment contract has been amended to a standard 12-month notice period,” Mr McFarlane said.

The move comes ahead of Westpac’s full-year results release next week. It follows a hefty $1.3bn penalty from financial crimes regulator Austrac.

“In the short time Peter has been CEO, he has made a significant contribution to Westpac, in a year of unprecedented change,” Mr McFarlane said.

“He has guided Westpac through the challenges of COVID-19 as well as settling the Austrac matter.

“His strategy reset is already driving fundamental change to how the company operates with clearer accountability, faster decision-making and a focus on improving risk management. He has also refreshed the executive team and refocused the bank on its core markets and products.

“Given the program of work under way, we are delighted to have leadership continuity.”

Mr King said: “It is a privilege to lead Westpac.

“While I am pleased with what we have achieved over the last six months, we have a significant agenda ahead that requires a longer-term commitment than two years. I am determined to see Westpac return to a leadership position.”

Mr King’s contract terms, including a base salary of $2.4m and the potential to earn an additional $2.4m in short-term bonuses, remain unchanged, except for the removal of the two-year term.

Westpac this week warned cash earnings would take a $1.22bn hit due to writedowns, higher customer compensation and a record Austrac penalty. Westpac said that new charges and provisions worth more than $800m, combined with the previously announced Austrac penalty, would have an impact on its second-half results. This has stoked concerns about whether the bank will pay a second-half dividend.

Shares in Westpac closed down 4c at $17.91.