Here's Ian Narev's brutal performance review giving him a 0 for reputation risk management

Ian Narev announcing the bank’s 2017 full year results. Picture: Jason McCawley/Getty Images

Commonwealth Bank CEO Ian Narev’s annual performance review was a difficult one this year.

The head of Australia’s biggest company scored well on financial targets, having just posted a record cash net profit of almost $10 billion.

But when it came to reputational risk, he got a zero on his 2017 scorecard and lost 100% of his short-term bonus of $2.73 million.

The scorecard:

Source: CBA

The board of directors thought the financial results were strong but the damage to trust and risk “significant”.

“The board recognises the significant damage caused to the group’s trust and reputation as a result of risk matters, most notably the recent civil penalty proceedings initiated by the Australian Transaction Reports and Analysis Centre (AUSTRAC),” wrote Sir David Higgins, chairman of the CBA’s remuneration committee.

“In determining executive remuneration outcomes for FY17, the overriding consideration has been to the collective accountability of the Executives for the overall reputation of the Group and risk matters.

“Accordingly, the short-term variable remuneration (STVR) outcomes for the CEO and group executives were adjusted downwards to zero for FY17.”

He said the board of directors recognised there was shared accountability for the overall reputation of the group. The base and committee fees for directors for the 2018 financial year was cut by 20%.

Higgins referred to last year’s AGM vote by shareholders against the remuneration report as a first strike. If it happened a second time, all directors would lose their positions on the board.

He foreshadowed a new pay approach for 2018, including non-financial measures relating to trust and reputation and employee engagement.

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