SYDNEY (Reuters) - Commonwealth Bank of Australia (CBA.AX) easily overcame protest votes against executive remuneration and board appointments at an annual general meeting on Thursday, as it tries to rebuild its reputation after a series of scandals.
The remuneration report gained 91.4 percent support, lower than the near-unanimous result most large Australian companies get for that item, but enough to protect the A$142 billion ($108 billion) lender from a mandatory board spill.
Shareholders also supported the appointment of a new independent director and three incumbents to the board of Australia’s biggest company. But in a sign of shareholder dissatisfaction, Andrew Mohl, the longest-serving of them, won only 84 percent of the vote.
“It is good that the shareholders had their say,” Chairman Catherine Livingstone told Reuters after the three-hour meeting.
In her address, Livingstone told shareholders the bank was determined to “rebuild trust” after Australia’s financial intelligence agency, AUSTRAC, accused it of systemic failings to spot thousands of illegal transactions, some of which allegedly involved drug syndicates and terror financiers.
The meeting was being watched for signs of a shareholder revolt. Under Australian corporation law, a second consecutive vote against CommBank’s remuneration report, following a “first strike” in 2016, could have forced it to spill the board.
In the end, the 2017 report was approved comfortably but not without some shareholders venting their unhappiness.
“Most of your executives ... are on A$1 million plus,” said Rodney Jeffrey, one of dozens of shareholders who addressed the meeting.
“Why should there be an incentive system at all? Aren’t people committed to a company on that salary?” he asked, to cheers from the assembled investors.
The bank’s biggest shareholder, U.S. asset manager BlackRock Inc (BLK.N), said however that the board had “responded well to shareholder concerns”.
Specifically, it welcomed changes to remuneration policy to clarify what benchmarks executives must meet to receive short-term bonuses.
CommBank also ditched last year’s plans to reward executives for subjective “people and community” targets, and introduced tests for bonuses against non-financial and reputation-building measures.
CommBank slashed executive bonuses in response to the money-laundering lawsuit filed against it by AUSTRAC, which could expose the lender to billions of dollars in fines.
Chief Executive Officer Ian Narev, who has led the bank since December 2011, took a 46 percent pay cut and announced he would step down by next June.
Still, the bank argues that most of the alleged money-laundering breaches were caused by a software glitch, and says it will contest its level of responsibility. It has until Dec. 15 to file its defense with the court.
Australia’s corporate and banking regulators have started separate investigations, while shareholders have filed a class-action lawsuit.
CommBank shares plunged after AUSTRAC filed its lawsuit in early August, but have since recovered most of their losses. On Thursday afternoon they were 0.45 percent higher at A$81.03, in line with the broader market.
Additional reporting by Byron Kaye; Editing by Stephen Coates