NAB chief executive Andrew Thorburn has taken a $2 million pay cut after the lender’s full-year cash earnings fell 14.2 per cent and the bank owned up to poor customer treatment.
Mr Thorburn’s total remuneration for the 12 months to September 30 was $4.375 million, down from $6.448 million in the previous financial year.
The 32 per cent pay cut – the largest among the big four bank chief executives in both percentage and absolute terms – was largely due to a fall in long-term incentives under a new pay structure that NAB says more closely aligns executives’ interests with that of shareholders.
NAB said bonuses across the bank fell by $114 million on 2017 following a year in which the lender, like its peers, was hauled across the coals at the financial services royal commission for failing to put customer interests above other considerations.
‘The group CEO has accepted accountability for NAB’s failure to fix mistakes quickly, remediate customers promptly and set things right,’ NAB said in its remuneration report.
‘These failures have impacted NAB’s reputation.’
Mr Thorburn’s expensive haircut meant he was not the highest paid member of staff at NAB.
That honour was taken by Patrick Wright, with the chief technology and operations officer pocketing $4.412 million.
Mike Baird was paid $2.651 million for his first full year in charge of NAB’s consumer unit, seven times the $377,780 he was earning before suddenly quitting as NSW premier in January 2017.
Anne Loveridge, NAB’s remuneration committee chairman, said the deferred shares that under the new structure make up the majority of executives’ bonuses could be further deferred, clawed back or forfeited at the board’s discretion.
‘It is aligned to the shareholder experience and outcomes, as 60 per cent of variable reward is provided in dividend paying shares,’ Ms Loveridge said.
‘These are deferred for at least four years to encourage long-term thinking and to build a significant shareholding, so executives experience the same outcome as shareholders on a significant component of their remuneration.’
The renumeration report acknowledged the impact on Mr Thorburn’s pay of an alleged multi-million dollar fraud against the lender involving the CEO’s former chief of staff.
NAB discovered the alleged corporate fraud in December and passed the findings of its own investigation to police in January.
‘Certain matters emerged … (including) certain control failings and breaches of policy in the office of the CEO, and a small number of unintended breaches of policy by the group CEO,’ the report said.
‘These matters have been resolved and closed to the board’s satisfaction.’