Westpac cuts exec pay but scores first strike

WESTPAC is set to suffer a first strike from shareholders after more than 50 per cent of early votes went against the bank’s remuneration report.

Chairman Lindsay Maxsted told the bank’s annual general meeting in Perth that early voting shareholders had cited unhappiness over executive bonuses amid the fallout of industry scandals heard at the financial services royal commission.

All but one Westpac group executive had their short-term cash bonuses cut and top-tier staff saw an average 25 per cent drop in rewards, but shareholders were still dissatisfied.

“The key point from those voting against the remuneration report has been that although the board took events over the year into account, many have questioned whether we went far enough, particularly in reducing short-term variable reward paid to the CEO and other executives,” Mr Maxsted said yesterday.

Chief executive Brian Hartzer’s cash bonus was down about $450,000, or 30 per cent, to $1.04 million for a year in which profits were flat and the big banks were hauled across the coals at the royal commission.

Mr Hartzer’s total realised remuneration fell 9.4 per cent, or $512,325, from $5.46 million to $4.94 million.

Mr Maxsted said the bank would respond to the blow of the sizeable shareholder revolt, which puts the board at risk of a second strike and spill vote at next year’s AGM.

He said the issues raised at the royal commission, which included Westpac’s admission of falsely witnessed loan documents, did not represent the culture of the industry or the bank.

“Although the royal commission has clearly focused on matters of extreme importance, it has captured only a fraction of the activity taking place inside financial institutions,” Mr Maxsted said.

He said Westpac had taken four key lessons: it was slow to understand and react to complaints, it did not quickly enough focus on conduct and reputation, some bonuses encouraged poor behaviour, and it did not appreciate risks in financial planning.

“Addressing these issues is our priority and we are absolutely committed to restoring the standards that you, the community, and customers expect,” Mr Maxsted he said.

Mr Maxsted said the royal commission should not be allowed to define the way the banking sector was perceived.

AAP