SYDNEY (Reuters) – National Australia Bank (NAB.AX) shareholders delivered an unprecedented protest vote against the lender’s executive remuneration plans on Wednesday, the latest display of investor disquiet over poor governance in the country’s financial sector.
A man walks past ATM machines at a National Australia Bank branch in Sydney, Australia April 20, 2018. REUTERS/Edgar Su
NAB Chairman Ken Henry told the annual general meeting in Melbourne Australia’s fourth-largest lender would change its pay structure next year, after taking into consideration investors’ concerns and the recommendations of a public inquiry into the financial sector.
Shareholder Chris Schott told the meeting NAB’s board and its senior management were “failed capitalists, they have destroyed millions and millions of dollars of value. They can’t continue”.
The comments were met by cheers in the room.
More than 80 percent of shareholders had voted down NAB’s pay proposals, Henry said, basing the tally on proxies received ahead of the final vote on the floor of the AGM later on Wednesday.
The vote is a record high for any Australian lender and the second such protest against the pay plans of one of the country’s top-four banks in as many weeks, as investors vent their anger over widespread wrongdoing exposed by the year-long inquiry.
Under Australian corporate rules, if more than a quarter of shareholders vote against a pay proposal for two years running, they can call for the board to be removed. Both NAB and Westpac Banking Corp (WBC.AX) have now received one strike.
Australian banks have seen about A$67 billion ($48.21 billion) wiped from their market value since February when the quasi-judicial inquiry started its hearings. Its final report is due in February 2019 and could lead to tougher regulatory oversight.
Investors have turned against the banks as earnings tumble, growth plans are abandoned and fee income is cut in the fallout of the inquiry.
“This has been a challenging year,” Henry told the AGM.
“The board is hearing loud and clear that our new scheme is not right. We tried, but we got it wrong. We are listening to you. We will try again.”
NAB shares were 0.95 percent higher, while the broader market was slightly lower in midday trading. The bank’s shares have lost over 20 percent since the inquiry began on Feb. 12.
NAB drew criticism from shareholders on Monday after it revealed that CEO Andrew Thorburn would take a two-month holiday after the AGM.
Reporting by Paulina Duran and Jonathan Barrett in SYDNEY; Editing by Matthew Lewis and Stephen Coates