NAB’s Andrew Thorburn says short-term bonuses didn’t change the way he worked

  • NAB CEO Andrew Thorburn told the financial services royal commission short-term bonuses did change the way he worked.
  • Under recent changes, compensation packages has shrunk and incentives deferred for longer.
  • Previous compensation schemes, he said, had been “bait” to bad behaviour.

Andrew Thorburn, the CEO of the NAB, told the financial services royal commission that short-term incentives hadn’t changed the way he worked.

During wide-ranging questioning in the royal commission today, Thorburn said deferred STIs (short term incentives) were more a recognition of achieving shareholder returns.

“But if we didn’t, we wouldn’t (get the bonus),” he told the hearing.

“I didn’t think of it as realistic or unrealistic. It didn’t change the way I did my work. If it happened, then that was good. If it didn’t, so be it. So it wasn’t something I thought of as unrealistic or realistic.”

The NAB released its annual report earlier this month showing Thorburn’s pay was $2 million less in 2018 than the previous year. That equates to an almost one-third cut. Overall, bonuses were cut across the NAB by $114 million from target.

In the royal commission today, Thorburn told the hearing the total compensation package had come down and incentives deferred for longer.

And long-term incentives can be withdrawn at the discretion of the board of directors.

Previously, Thorburn believes the bank had the wrong incentive schemes.

“We put the bait right there for people,” he told then hearing, referring to the introducer scandal where bank staff benefited from high volumes of business from people who introduced new loans to the bank.

“They stepped over the line. That’s their own decision. I’m not excusing that.

“But now we’ve got a variable reward scheme where it’s annual, it’s centralised, based on achieving a number of things across four or five key result areas, it’s deferred, deferred for the longer term for executives.

“It’s more a recognition than a driver. They (staff) will do the right thing, they will work hard, they will want to do well for colleagues and for clients, they will be proud to work in our bank because it does the right thing.

“At the end of the year if they’ve done well they could get an incentive payment but it’s not what’s driving them through the year.

“It’s a difference between my motivation and hunger to do something which earns me that — and I am sure some people are like that — as opposed to my job is to be a professional and to do those things I have said.”