Shareholder revolt hits Westpac bank after a year of pain

SYDNEY: Westpac Banking Corp shareholders voted against its executive remuneration plans yesterday, dealing a symbolic blow to Australia’s second-biggest lender after a year in which the finance sector has been rocked by misconduct allegations.

Owners of nearly two thirds of the company’s shares voted against its executive remuneration report, at least double the number required to shoot it down, as a host of small shareholders and large pension funds voiced their disapproval at its annual meeting.

Under Australian corporate rules, if more than a quarter of shareholders vote against a pay proposal for two years running, they can call for the board to be removed. The vote against Westpac was its first, although larger Commonwealth Bank of Australia received a first “strike” in 2016.

“The board acknowledges the significant concerns that you have raised,” Westpac chairman Lindsay Maxsted told the meeting in Perth.

“We’re here to represent your interests and we will think deeply about the concerns that have been expressed.”

Billions of dollars have been wiped off the value of Australia’s big banks this year as a public inquiry into the financial sector exposed a greed-driven culture in which staff were incentivised to mislead customers.

In one case, a blind pensioner told the inquiry Westpac had made her sign a form she could not read to guarantee her daughter’s pool maintenance business, and then went after her house when the business failed.

Maxsted told shareholders Westpac had already cut short-term executive bonuses by 25% even though not all wrongdoing exposed at the inquiry was representative of the bank.

But Louise Davidson, CEO of the Australian Council of Superannuation Investors (ACSI) which represents 39 large funds, said shareholders had sent a “loud message” that Westpac’s pay practices needed to change. “Investors’ view is that reducing bonuses by 25% just didn’t cut it,” she told Reuters.

ACSI, which says its members own about 10% of each of Australia’s top 200 companies and the biggest pension fund, would vote against the executive pay proposals of Australia and New Zealand Banking Group Ltd and National Australia Bank Ltd at their meetings in coming weeks.

CBA held its meeting in November. Westpac shares shares rose 1.7% yesterday, in line with a broader market.

The Royal Commission inquiry is due to hand in its final report by February.