Westpac CEO Brain Hartzer quits with golden handshake but forgoes bonuses

Departing Westpac chief Brian Hartzer will pocket fixed pay of $2.7 million to walk but will forgo a much larger amount.

Outgoing Westpac chief executive Brian Hartzer will pocket fixed pay of $2.7 million, but will forgo a much larger amount of up to $22m in short-term and long-term bonuses as a result of the explosive Austrac legal action.

The bank announced Mr Hartzer would step down as CEO on December 2 and be paid out his 12 month notice period.

He has fallen on his sword given the financial crimes agency, Austrac, lodged damaging action against the bank last week alleging it breached the law 23 million times and helped facilitate child exploitation.

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Westpac shares fell to their lowest level in more than nine months on Monday, sinking another 1.3 per cent to $24.44. The stock has amassed losses of about 8.8 per cent since the damning Austrac action was made public last Wednesday.

Outgoing Westpac chief executive Brian Hartzer speaks during a press briefing after the company's full year results were announced in Sydney in 2017.

“Both Mr Hartzer’s unvested deferred short-term variable reward and unvested long-term variable reward will be forfeited,” Westpac’s statement to the ASX said.

“In addition to forgoing his FY19 short-term variable reward, Mr Hartzer will also not be eligible for short-term variable reward in FY20 or FY21.”

In 2020 Mr Hartzer — depending on hurdles being met — could have earned a short term bonus of $2.7m and maximum long-term incentives of $3.6m.

Westpac’s latest annual report showed Mr Hartzer held 151,478 ordinary shares, inclusive of 20,933 that are restricted under a CEO plan. He was also allocated a further 636,540 share rights under the Westpac long-term bonus plan.

The exact amount forfeited by Mr Hartzer will depend on how many of the share rights had vested.

Ahead of Westpac’s annual general meeting on December 12, Westpac said it would not proceed to seek shareholder approval for Mr Hartzer’s proposed FY20 long-term variable reward. It had been outlined in the 2019 notice of meeting.

Chief financial officer Peter King has reversed his decision to retire in 2020 and will take the reins as acting CEO on December 2.

In September, Mr King had flagged his plan to retire from the bank when a replacement was found.

Tuesday’s statement said Mr King would remain in the acting role until a permanent CEO was appointed, with a three-month handover.

He will receive annual fixed pay of $2.1m, and can be eligible for a short-term bonus target of the same amount and an annual long-term incentive of $2.8m.

“All other key terms and conditions of Mr King’s employment as Acting chief executive officer will remain in line with the disclosure provided in the 2019 Westpac Group annual report,” the bank said.

The changeover date of December 2 is the same day that National Australia Bank’s new CEO Ross McEwan takes over.