COMMONWEALTH Bank bosses have dodged the executive "first strike" pay bullet despite a backlash from shareholders over failing to meet their customer satisfaction targets.
Shareholders at the annual general meeting in Brisbane today followed the recommendation of two corporate governance firms to vote in favour of the pay report which awarded millions of dollars in bonuses to executives.
But the number of votes cast against the pay packet rose to 14 per cent – up from just 4 per cent last year.
While the move deprives “mum and dad” investors of a “first strike” protest under new federal laws aimed at reining-in corporate excesses, shareholder advocates say the jump in negative votes would “come as a blow” to the board.
“They had 26 million vote against last year, this year it’s 84 million so it’s a big jump,” The Australian Shareholder Association’s Stephen Matthews said.
“That can be almost entirely attributable to the fact that they paid out these bonuses when the executives didn’t achieve these customer satisfaction targets.”
Mr Matthews said the CBA had attracted the resentment of shareholders who had still not received a clear explanation of what had happened.
Under the laws which came into effect for the first time this AGM season any company that receives a “no” vote over pay by more than 25 per cent of the shareholders two years in a row will be forced to put their directors up for re-election.
Pacific Brands, Crown, and Perpetual are among high-profile companies to have received first strikes so far this year.
The original performance metric said if CBA ranked in the top three of the big banks in customer service the directors could dip into a $36.1 million bonus pool.
But when the bank only came in fourth the board decided that was good enough and used its discretion to award 25 per cent of the bonus anyway.
Chief executive Ralph Norris did however take a pay cut in 2011, earning $8.6 million compared to $16.2 million last year.
Mr Norris told the AGM that Commonwealth's aim of being number one in customer satisfaction remained on track.
Improving customer service would be one of the key drivers of growth in an environment of constrained credit growth and tighter margins, he said.
ASA members hold about $500 million worth of the bank’s shares which is only a small part of the bank’s $77 billion market capital.
Corporate governance firms CGI Lewis and ISS Proxy Advisory Services both recommended that shareholders vote in favour of the report.
ANZ remains the market leader in customer satisfaction, followed by Westpac, NAB and then the CBA, a Roy Morgan report in July 2011 showed.
Furthermore the biggest improvement amongst home loan customers came from Westpac (+10.6 per cent), followed by NAB (+4.6 per cent) and then ANZ (+3.2 per cent). The CBA’s however dropped by 2.5 per cent.
Comments on this story
Marc Posted at 7:09 PM November 08, 2011
Should be law, miss performance targets, no pay rise for you....If I didn't get my job done on time (performance target) I'd be hit up for liquidated damages.
Lew of Longreach Posted at 6:53 PM November 08, 2011
Why do these Greedy Bastards get all this money in the current conditions ??, they should be leading from the front and be happy with the huge salaries they already earn and not have their snots in the trough for all they can get.
Age of Ryde Posted at 6:45 PM November 08, 2011
It's incredible, they do as they like. Absolutely disgusting.
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Executives Awarded Millions Of Dollars In Bonuses (Read 641 times)
