Westpac has changed the way it reports what it pays senior executives so that, at first glance, it appears that its CEO, Brian Hartzer, actually got less last year than previously reported.
However, Hartzer still earned in 2017 more than double his base pay of $2,686,000 (which didn’t increase) mainly because of rises in bonus payments.
The bank’s annual report, released today, shows Hartzer being paid $5,456,844 in 2017, a nice rise from $4,938,059 in 2016.
However, the 2016 number is far less that previously reported in the Westpac 2016 annual report which recorded Hartzer getting $6,752,017 that year.
The reason for the discrepancy is that Westpac has added to its annual report a new way of reporting executive remuneration.
Now it shows what was “paid and vested” while previously it gave “details” — according to Australian Accounting Standards — which may have included amounts given but not actually paid that year such as shares.
Whichever number is a true reflection of pay — what was actually paid or the accounting standards value of remuneration that year — Hartzer is still a long way from making the top 10 highest paid CEOs in Australia. Ian Narev at the Commonwealth gets around $12 million.
Bonus payments to senior executives of public companies are an issue with shareholders. A proposal for so-called soft targets to be added to senior executive bonuses was behind a first strike vote in an AGM against the remuneration report of the Commonwealth Bank last year, the first such revolt by shareholders against a major bank.
In 2017, Hartzer was awarded 111% of his short term bonus with half of it — $1,490,730 — paid in cash now and the rest deferred.
Westpac, Australia’s second largest bank, has worked to head off any backlash on executive pay, saying that remuneration levels of new executives will be lower than the executives they replaced.
This week Westpac reported its full year results, a 3% rise in full year cash profit to $8.06 billion. Westpac shares fell on the news and are currently trading at $32.72, down 1.6% from Friday’s close of $33.27.
Here’s how Westpac reports executive pay this year:
The same annual report later gives the accounting standards version, which is close to the numbers reported in 2016: