Big Four bank NAB (ASX: NAB) is following in the footsteps of its peers by withholding executive bonuses.
As part of the bank's FY19 report the board has determined that the executive leadership team will receive no short-term variable reward and no fixed remuneration increase for FY19.
"While underlying business performance for 2019 was solid, NAB has not achieved benchmarks on some financial and non-financial results," says NAB interim group CEO and chairman-elect Philip Chronican (pictured).
"We recognise the impact on our brand, reputation and the trust that our customers place in us. These are all considerations we make when assessing performance. While we have made progress, it is not enough to be recognised in executive short-term variable reward in 2019."
As a result, executives will miss out on the initially proposed maximum of $14.4 million in short-term variable rewards.
The move from NAB follows similar decisions made at Westpac (ASX: WBC) and ANZ (ASX: ANZ).
Westpac CEO Brian Hartzer decided to forego $1.6 million in bonuses, while ANZ chief Shayne Elliot saw his bonuses cut by $250,000.
NAB, ANZ, and Westpac were all hit by shareholders with a 'first strike' on remuneration at the end of FY18. If they were to be hit again this year shareholders would receive the opportunity to vote on spilling the board.
NAB's decision to hold back bonuses follows the revelation that the bank had to pay an additional $1.19 billion in customer remediation in the wake of the Royal Commission into the financial services industry, bringing NAB's total remuneration paid to customers so far to $2.1 billion.
The company also revealed its FY19 results today, showing a NPAT of $4.8 billion, down 13.6 per cent on FY18.
Earnings were also down at the end of FY19 to $5.1 billion from $5.7 billion in FY18.
"This year has been very challenging, requiring significant actions for us to deal with past issues and make real changes aimed at earning trust with customers and the community," says Chronican.
"We are now more than two years into our three-year transformation. Becoming simpler and faster is delivering real benefits, allowing us to invest in better products and services as well as stronger compliance and controls while holding FY19 expenses broadly flat, as targeted."
"We are determined to move forward by fixing issues of the past and taking actions to meet customer and community expectations. A gap remains between where we are today and where we need to be for customers, but we are making progress and will execute with urgency, discipline and accountability to become the bank we can all be proud of."
Shares in NAB are up 2.50 per cent to $28.50 per share at 1.20pm AEDT.
Business News Australia
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