The money laundering scandal at the Commonwealth Bank, and its damage to the company’s reputation, has cost senior executives dearly.
The bank’s board of directors last week axed short term bonuses for Narev and his executive team.
According to the annual report released today, CEO Ian Narev’s total pay for 2017 came in at $5.7 million, short by almost $3 million had he realised all of his incentives and bonuses.
His full realised pay in 2016 was $12.3 million.
Narev lost $2.73 million in short-term bonuses. The average bonus loss for each of his senior executive team was almost $700,000.
However, the annual report also shows that Narev has 131,349 shares in his own right. At today’s share price of $80.91, that works out to be about $10.6 million. He also could get another 230,858 shares if he hit targets for long term incentives.
This chart from the annual report shows how short term bonuses have been linked to net profit:
“Risk is an important factor in accounting for short-term performance,” says the annual report.
This scorecard shows how Narev hit most of his targets to get the short term bonus, but was marked down to zero because of the reputation risk: