- Bonuses to senior executives at Westpac are down by 25% on average.
- The bank has acknowledged shareholders have seen their holdings fall in value.
- CEO Brian Hartzer’s realised pay was $4,944,519 in 2018 compared to $5,456,844 the year before.
Westpac cut by 25% its short term bonuses for its senior executives following a loss of “trust and reputational damage” from the financial services royal commission.
According to the bank’s annual report, long term bonuses were forfeited for a third year in a row and short term bonuses were on average 25% lower than 2017.
“The royal commission has highlighted examples of areas where our actions have given rise to poor outcomes for some of our customers,” the annual report tells shareholders.
“This has contributed to a loss of trust and reputational damage to Westpac and the industry.
“The board also recognises that the value of your shares has declined over the year as a result of a range of factors.”
Westpac shares last traded at $27.20, down from a 12 month high of $33.33.
The short term bonus of CEO Brian Hartzer was cut by three-quarters (77.5%) of the target opportunity, and by between 50% and 110% for senior executives.
For Hartzer, the loss of the long term incentives meant the disappearance of $4,263,037.
However, the money reaching his pocket was still substantial, even if it was lower than last year.
Hartzer’s realised pay was $4,944,519 in 2018 compared to $5,456,844 the year before. Including equity he received $6,218,959, down from $6,811,269.
In 2018, Westpac’s cash earnings were flat at $8 billion due to slower loan and deposit growth, the full impact of the bank levy and an increase in provisions for customer refunds and payments.
In the annual report, chairman Lindsay Maxsted says the financial services sector has been the subject of intense scrutiny and interrogation from Federal Government, regulators, the media, and the community.
“As we consider culture it is clear that we, along with the broader industry, face a number of challenges,” he says.
“These include the need to rebuild trust and drive better customer outcomes.
“And programs are already underway to strengthen our culture and remove structures that may encourage poor behaviour.
“We are committed to continuing this work and meeting these challenges with honesty, integrity and transparency, and to being accountable to our stakeholders for our actions.”