ANZ faces second strike risk as another adviser urges vote against executive pay
ANZ’s decision to cull $32m in bonuses was not enough punishment, a second proxy advisory firm has warned as it calls for investors to vote against the bank’s pay report.
ANZ’s investors are being encouraged to vote against the bank’s pay report by half of the independent proxy advisory firms, despite the board vowing to strip executives of a combined $32m in bonuses.
The beleaguered bank suffered a first strike - where more than 25 per cent of investors vote against a remuneration report - at last year’s AGM. In a bid to avoid a second strike and a vote to spill the board, the bank took the axe to executive pay in its recent annual report, denying former CEO Shayne Elliott $13.5m in bonuses.
New boss Nuno Matos, who took over from Mr Elliott in May, told a parliamentary select committee two weeks ago that it was “one of the most severe demonstrations of accountability” he had witnessed in his career.
But now proxy firm ISS has joined CGI Glass Lewis in recommending investors vote against the pay report, echoing concerns that Mr Elliott’s punishment does not go far enough and leaves almost $8m in long-term bonuses on foot.
“Given the material failures of risk and associated regulatory action for which the former CEO is accountable…shareholders may question the rationale for these grants to have been left on foot,” ISS’s report, seen by The Australian, noted.
However, both Glass Lewis and ISS advised shareholders to vote against spilling the board, effectively meaning their stance on the pay report is just a protest vote.
Melbourne-based Ownership Matters, which advises many Australian institutional investors, has recommended shareholders vote in line with all of the ANZ board’s recommendations.
The report, seen by this publication, said the remuneration report was a “welcome change from the long-standing lack of meaningful remuneration consequences for mediocre shareholder
returns and poor risk management performance apparent at ANZ over a prolonged period”.
It noted that Mr Elliott’s unvested equity was “useful as ANZ was involved in various ongoing matters where his co-operation would be beneficial”.
“This retained equity also allowed for further adjustments if and when additional matters came to light,” it added, suggesting that Mr Elliott may suffer more clawback in future.
It is understood that ACSI, the fourth and final of the independent proxy advisers, also recommends investors back all of the board’s voting recommendations.
The Australian Shareholders Association, which represents retail investors, also recommends shareholders back the remuneration report because they are “advised there remains some opportunity to clawback” more bonuses in the future.
However, the ASA recommends investors vote against the re-election of Paul O’Sullivan, who has already said he will not not seek re-election once his term is over.
“We believe Mr O’Sullivan must be held accountable for the serious events that have unfolded under his chairmanship,” the ASA report stated.
Mr Matos said that his own decision to forgo any bonus this year was because he “asked the board to be part of that pain”.
ANZ’s AGM is on December 18. The bank’s record $240m settlement with ASIC is currently in limbo after a Federal Court judge demanded more information about how it has taken steps to ensure it avoids failing to refund fees to dead customers.
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Originally published as ANZ faces second strike risk as another adviser urges vote against executive pay
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