Investors have had a number of issues with the remuneration structure, which collapsed long and short term incentives into a single incentive stream, removed a direct link to total shareholder returns and focused on softer metrics including non-financial risks and conduct matters.
In particular, there were concerns that Andrew Hagger, who ran the retail bank and left NAB after an appearance at the royal commission, was still awarded a bonus, even if it was only 17.5 per cent of his possible variable award.
The bank’s remuneration committee is chaired by Anne Loveridge, who is also a director of funds manager Platinum Asset Management and health insurer nib.
Last week, shareholders cast a 64.2 per cent vote against Westpac’s remuneration report, the biggest “strike” for a so-called blue chip corporation.
Dr Henry’s backdown from the unpopular remuneration scheme comes less than two days after the bank said chief executive Andrew Thorburn will take extended leave after he described this year as “the biggest and most relentless” of his career.
Some investors are still puzzling about the surprise development.
“There’s one of two ways to look at this – he needs to recharge batteries for the task ahead of him, or alternatively, it’s been such a rugged year he needs a break,” said Australian Shareholders Association’s Dennis Shore.
“I don’t know what to make of it, you can only take these things at face value. There’s a huge task ahead of them, whether they want to wait for the final findings of the royal commission, or get right into it, and it seems they are going to wait. It’s about how they allocate resources in the most effective way.”
Dr Henry will also tell the meeting that while 2018 was a “challenging year”, the bank delivered a solid performance in 2018 and has a clear plan to focus on customer needs.
Mr Thorburn is taking holidays following the annual general meeting this week, and will return to work ahead of the release of the royal commission‘s final report, due on February 1.
As well as the royal commission, Mr Thorburn has headed the bank during executive reshuffles, redundancy programs and share price lows, and as an investigation into an alleged scam involving overcharging and kickbacks escalates. NAB’s former chief of staff Rosemary Rogers had her house raided last week in connection with the investigation. No charges have been laid.
National Australia Bank’s share price is at the same level as in mid 2009. Shares closed down 1.8 per cent yesterday to $23.13.
Clime Investment Management’s managing director John Abernethy said he was surprised there had been “no clear and unequivocal ASX announcement from the NAB board” about Mr Thorburn’s decision take long service leave.
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