ANZ CEO Shayne Elliott was set to receive a higher bonus before he asked the bank’s chairman for a pay cut so he could share the pain from a bruising banking royal commission.
ANZ chairman David Gonski had initially planned to increase Mr Elliott’s performance-related pay for the 2018 financial year, the royal commission heard.
But Mr Elliott asked him to reconsider, partly because the bank had just announced hundreds of millions of dollars in provisions for customer remediation and software issues.
“It’s about unity, accountability and frankly credibility – externally but even more importantly internally,” Mr Elliott wrote in an email last month.
“I can’t ask my people to be down 22 per cent unless my own rem (remediation) reflects a similar number,” he said, referring to the overall reduction across the bank.
Mr Elliott said he could not recall what level of variable remuneration reward Mr Gonski had suggested, but it would have been an increase.
“The recommendation, I believe, was that it was going to be higher and I’m asking that they bring it down,” he told the royal commission on Wednesday.
Mr Elliott said he was ultimately accountable as CEO.
“I think it’s really important as the leader of a company, a group, that I am seen to share in the benefit but also the pain of any adjustments.
“It would drive a really bad culture if the CEO is somehow seen to be doing a great job but somehow everybody else has let the company down.”
Mr Elliott ended up taking a 23 per cent cut to his variable remuneration to $3.15 million, due to the conduct issues raised in the royal commission and the resulting damage to ANZ’s reputation.
His overall package fell by almost $1 million to $5.25 million.
ANZ cut its overall bonus pool and three other senior executives also had their variable remuneration reduced for failing to meet risk management standards, although the reasons were not disclosed in the bank’s annual report.
Mr Elliott did not believe a public admonishment for failings was necessary, saying he held individuals to account.
ANZ’s board has agreed to a 20 per cent reduction in their fees for the 2019 financial year, in light of the failures highlighted in the royal commission.
Those failures have included a variety of account processing errors expected to lead to hundreds of millions of dollars in compensation for customers.
The five different errors each led to large numbers of customers being overcharged or not receiving agreed discounts or benefits in relation to their home loans.
Mr Elliott said the total number of accounts affected was approaching two million, but noted many would be double counted such as where a customer received both credit card and home loan remediation.
He conceded the bank had not adequately addressed the processing errors previously, applying “bandaid” fixes.