Corporate Responsibility and Governance

Running head: CORPORATE RESPONSIBILITY AND GOVERNANCE
CORPORATE RESPONSIBILITY AND GOVERNANCE
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CORPORATE RESPONSIBILITY AND GOVERNANCE
Editorial 1:
The Australian Newspaper
NAB faces Investors backlash over Executive Remuneration
National Australia Bank surfaced a record-breaking revolution over the executive pay in
2018. Ken Henry, the chairperson, admits that bank got it incorrect and will revamp its
remuneration structure this year. The bank faced an unparalleled revolt by the investors, with the
maximum votes against the pay policy structure in corporate history.
NAB conducted an annual general meeting in Melbourne where more than 80 per cent of
the shareholders including the Australian Shareholders Association, the Australian Council of
Superannuation Investors, Ownership Matters and Institutional Shareholder Services, opposed
the NAB’s remuneration report. This was a massive rejection for the blue-chip company that
exceeds the Westpac’s pay report by 64 per cent votes and Telstra’s by 66 per cent.
Christopher Schacht, a former member of the Australian Labor party, held the Board and
the Executive management responsible for the failures in the capitalist system as they have
destroyed a considerable amount of shareholders’ value. Further, he added that the shareholders
are not accountable for the loss and it is the NAB executives, who broke the law and should be
punished for the same. Moreover, he made his point that it should not take more than ten years to
resolve the issue.
Ken Henry, the chairperson, agreed to the terms that it would not take more than ten
years but the only problem arising was the change in the bank’s culture. He disclosed that the
concern was not only related to the remuneration report but also its exposures at the royal
commission.

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CORPORATE RESPONSIBILITY AND GOVERNANCE
"What we heard loud and clear was that we need to be much better in the way we provide
services to customers," Ken Henry said.
The Board and the Executive Members considered a reward scheme where the outcome
of the bonus was zero for non-performance.
Allegations under investigation at NAB
Considering the situation, various allegations were imposed on the NAB as well as the
chairperson. Ken Henry was interviewed about his United States’ first-class trip reserved by the
former employee of the bank in the mid of investigation. Henry, himself raised this issue with the
Board members. He mentioned being unaware of breaking the rules at that moment. Several
charges of allegations against the people at the bank were levied. Henry asked its people to wait
patiently for the consequence of the royal commission. The police investigated the alleged frauds
on the people within the bank.
The CEO, Andrew Thorburn was not involved in any fraud, but his former chief of staff
was taken under investigation. He left the bank and the Human Group, an outside event company
at the beginning of the remuneration case and investigation.
Changes in the executive pay
The current remuneration report does not put much attention to the non-financial risk.
Since the bank is operating globally, it needs to pay the competitive rates; instead, it decided to
provide zero bonuses to NAB and focused on short-term growth. According to Jennifer
Westacott, CEO, Business Council of Australia, the Board needs to revise the pay and reconsider
its importance to shareholders.