CBA faces revolt on executive pay

During the CBA annual meeting on Tuesday, shareholders grilled CBA chair Catherine Livingstone and chief executive Matt Comyn on the bank’s climate policies, the slashed final dividend for the year and the company’s remuneration policies. 

Around 78 per cent of shareholders voted in favour of the remuneration report for the year and the granting of $1.6 million in restricted share units to Mr Comyn – revealing that there were around 22 per cent in opposition. 

Under the two-strike rule, the board of a company will receive a strike if 25 per cent or more of shareholders vote against its remuneration report. After two strikes, the board is then up for re-election. 

There were questions from both shareholders and employees, with the dividend being docked from prior years and some staff allegedly facing wage increases of 1.5 to 2 per cent in an enterprise agreement that is currently being negotiated. 

Meanwhile, the board applied an upward discretion on Mr Comyn’s final pay packet this year, for “exemplary personal leadership and contribution at the industry and national level during the early months of the pandemic impact in Australia”, according to Ms Livingstone.

For financial year 2020, Mr Comyn received a fixed salary of $2.1 million and raised bonuses contributing to a total larger than $5.6 million, up from $4.3 million the previous year. The bank’s other executives would also see a rise in fixed remuneration. 

“Having the CEO take a 14 per cent pay rise on his $4 million plus salary, while only offering the rest of employees 1.5 per cent is unconscionable,” a staff member’s question stated to the board in the AGM. 

“As an employee, this makes me feel worthless. Why did the board direct the unnecessary 14 per cent and pay rises through for execs and why not to staff who’ve worked very hard, tirelessly, endlessly through COVID-19 on their training budgets, fair pay increases and bonuses (staff who are nowhere near $4 million plus per year)?”

The Finance Sector Union also inundated the bank with questions around employee wage rises, noting CBA was lagging behind competitors. 

FSU national secretary Julia Angrisano said the current offer has failed to recognise the work of staff in managing the impact of COVID-19. 

“It’s time for the CBA to recognise that its offer of a pay freeze for some staff while others were being offered 1.5 to 2 per cent in the current EBA negotiations falls far short of staff expectations,” Ms Angrisano said.

“The huge bonuses being paid to senior management should be accompanied by fair and decent pay for staff.

“Westpac paid its staff a 3.25 per cent increase and CBA staff believe the bank should be matching the pay rises granted to workers at other banks.”

But Ms Livingstone defended the bank, noting its new remuneration framework for the coming year, with CBA being set to reduce its total maximum pay packet for the CEO and senior management team by 19 per cent. 

The maximum short-term variable remuneration has been slashed from 150 per cent to 94 per cent of fixed remuneration, while long-term variable remuneration has been cut from 180 per cent of fixed remuneration to 140 per cent.

The previous long-term variable remuneration bonus has been split into two equally weighted components. One will become known as long-term alignment remuneration, delivered as share units and subject to performance and strategy execution. 

The other will be assessed on relative total shareholder returns across the ASX 20 peer group and a financial services peer group. 

Further, long-term vesting timelines have been extended from four years to seven years, while new clawback requirements are set to be introduced. 

“We’re committed to evolving the framework to ensure it remains fit for purpose for the future, including taking proactive steps to meet regulatory changes,” Ms Livingstone said. 

CBA’s net profit was down 11.3 per cent on the prior year, coming in at $7.2 billion for FY20.

The final dividend, at 98 cents per share, was also hotly contested at the meeting. A number of shareholders demanded to know why Mr Comyn’s pay was rising for the full year, as they copped lower payouts from the company.

Ms Livingstone reported the bank is keen to return shareholder payouts to previous levels.