Australia’s ANZ says CEO forfeited bonus amid shareholder angst

8:30 pm Wednesday, December 18th, 2024

By Byron Kaye and Rishav Chatterjee

SYDNEY (Reuters) -The CEO of Australia’s No. 4 bank ANZ gave up a long-term performance bonus worth A$3.2 million ($2 million) due to shareholder backlash related to bond-trading irregularities that have sparked regulatory investigations, the lender said on Thursday.

Shayne Elliott, due to exit as CEO in mid-2025 after nine years in the role, was awarded the long-term bonus previously but needed shareholders to vote for it just as the bank faces an Australian Securities and Investments Commission (ASIC) probe into suspected misconduct in a 2023 government bond issue.

Shareholder adviser groups indicated they would support the bonus by a narrow margin of 50.1% to 49.9%, according to a tally of proxy votes published by the bank ahead of its annual meeting on Thursday, but the bank withdrew the resolution at Elliott’s request, Chairman Paul O’Sullivan said.

“In recognition of shareholders’ views, and to limit the impact on the bank, Shayne has decided to forfeit this year’s long-term variable remuneration,” O’Sullivan told the meeting in Melbourne, to applause.

Elliott, the longest-serving leader of a top Australian bank, did not mention his pay in prepared comments at the meeting. When a shareholder asked about the bond issuance investigation, O’Sullivan replied the bank had found no indication of intentional wrongdoing.

Shareholders, meanwhile, voted 38% against the company’s executive remuneration report, according to proxy votes published by the bank, far higher than the 25% required to defeat the resolution.

The non-binding vote has no immediate consequence, but if an Australian company’s remuneration report gets a “no” vote – also known as a “strike” – for two years running, shareholders may call another vote on whether to remove the entire board.

“We remain unconvinced that the remuneration consequences applied to executives in 2024 have been sufficiently punitive given the scale of the issues the company has faced,” said one proxy firm, CGI Glass Lewis.

Elliott is being replaced by former HSBC executive Nuno Matos, who will likely face two immediate challenges after starting: leading the bank’s response to the ASIC investigation and its own review of non-financial risk plus integrating ANZ’s A$4.9 billion purchase in 2024 of the bank assets of insurer Suncorp.

Already another regulator, the Australian Prudential Regulation Authority, has increased the amount of cash ANZ must keep on hand, citing concerns about the company’s non-financial risk management.

ANZ shares were down 2.5% on Thursday, in line with other large lenders and the broader Australian market which was down after the U.S. Federal Reserve reduced the number of interest rate cuts it expects in 2025.

($1 = 1.6090 Australian dollars)

(Reporting by Byron Kaye in Sydney and Rishav Chatterjee in Bengaluru; Editing by Alan Barona and Jamie Freed)