AUSTRALIA’S COMMBANK SCRAPS CEO’S BONUS
CommBank CEO loses A$2.9m but retains board’s confidence
COMMONWEALTH Bank of Australia (CommBank) yesterday scrapped its chief executive’s bonus for damaging the bank’s reputation amid allegations it broke money-laundering and counter-terrorism financing laws, but said he retained the board’s confidence.
Australia’s financial intelligence agency last week accused the bank of roughly 53,700 breaches, launching a civil court action that could see the country’s biggest lender fined several billion dollars.
The case is the largest of its kind in Australian corporate history, and sent CommBank shares sliding for their biggest one-day decline in 18 months on Friday.
The bank’s board said yesterday it had cut short-term bonuses to zero for chief executive Ian Narev and other top executives for the year to June 30.
“In reaching this conclusion, the overriding consideration of the board was the collective accountability of senior management for the overall reputation of the group,” said chairman Catherine Livingstone.
The accusations have revived calls for a powerful judicial inquiry into Australia’s banking system following a series of scandals, including insurance fraud and interest rate rigging in recent years.
Treasurer Scott Morrison, who has previously rejected pressure for such an inquiry, told Parliament yesterday the government was prepared “to consider all options”.
An inquiry known as a Royal Commission could have the ability to interrogate bank executives and demand full disclosure of internal documents. The proposal has widespread public support and the backing of the opposition Labor Party.
The move, designed to smooth public concerns, came a day before the bank releases its annual results today, with analysts tipping record cash earnings of A$9.8 billion (RM33.3 billion).
CommBank paid Narev A$2.9 million in short-term bonuses as part of a total package of A$8.8 million last year.
In order to prevent a board spill being triggered at the annual general meeting in November, the bank needs to ensure its remuneration report is approved by more than 75 per cent of voting shareholders, following a “first strike” against it last year.
Under Australian law, a board spill can be triggered if two consecutive remuneration reports are voted down.
Meanwhile, a husband and wife filed a suit against the bank yesterday, accusing it of failing to disclose investment risks associated with climate change, adding to publicity headwinds for the bank.
The legal firm running the environmental case, Environmental Justice Australia, said it was a world first with potentially farreaching ramifications for corporate Australia.
Complainants Guy and Kim Abrahams, who bought the bank’s shares in the 1990s, decided to sue when it did not agree to name climate change as an investment risk in its annual reports. Reuters
Australia’s financial intelligence agency has accused Commonwealth Bank of Australia, under chief executive Ian Narev, of roughly 53,700 breaches.