National Australia Bank has cut executive bonuses as it continues its attempt to regain consumer trust amid the fallout of the financial services royal commission.
The lender, which recently held its mortgage rates to curry favour with customers following increases by its major rivals, is replacing short- and long-term incentives with a single variable bonus that it says will reduce executive rewards at target level by about 15 per cent.
The changes will kick in immediately, leaving chief executive Andrew Thorburn’s total target reward for the current financial year about 11 per cent lower than for 2017 – and 18 per cent down on 2016.
NAB chairman Ken Henry was explicit that the simplified bonus structure was an attempt to balance performance incentives with public expectations.
“Where NAB falls short of customer, shareholder and community expectations, the new framework provides the board with the ability to hold leaders accountable,” NAB chairman Ken Henry said on Wednesday.
Dr Henry said the bank is focusing on customers at every level of the business.
“This lens needs to be considered alongside financial metrics when assessing executive performance if we are to deliver long-term, sustainable performance for shareholders,” Dr Henry said.
Mr Thorburn’s fixed salary has been held at $2.3 million since 2016 and his so-called target remuneration will now be $7.94 million, down from $8.99 million last year.
But his maximum remuneration will be $10.76 million, down only slightly on 2017’s $10.82 million.