LB5231 Editorial: Executive Remuneration in Australian Banks

This assignment presents an editorial analyzing the controversy surrounding executive remuneration in the Australian financial sector. The editorial focuses on the shareholders' revolt against the proposed remuneration structures of major banks like NAB, highlighting the concerns of investors and the potential impact on the economy. It discusses the reduction in executive bonuses, the reactions of shareholders, and the role of financial experts in assessing the situation. The editorial also explores the broader implications of these decisions, including potential economic stagnation, reduced investment, and ethical considerations. The author cites relevant sources and presents a balanced perspective on the issue. The assignment is designed to improve business research skills and presents the topic from multiple points of view.

Running head: EDITORIAL FOR AUSTRALIAN NEWSPAPER
EDITORIAL FOR AUSTRALIAN NEWSPAPER
Name of the Student
Name f the University
Author Note

2EDITORIAL FOR AUSTRALIAN NEWSPAPER
Shareholders’ Revolt Against Executive Remuneration
The financial sector of Australia is facing a hard time as all the shareholders have moved
against the remuneration structure of two of Austraia’s largest banks. After the revelation of this
misconduct by the bank, experts are saying that the financial sector of Australia is about to face
the toughest time.
According to the financial experts, nearly 88% of the shareholders, protested against the
remuneration plan as depicted in the report of NAB. The report containing the new remuneration
structure was published during the annual general meeting of NAB. The investors have termed
the proposed remuneration system as ‘blunt’ and ‘harbinger of the failure’ for a capitalist
economy.
The report gave the shareholders as well as investors a shock by declaring a reduction in
the executive bonus by 30%. Along with NAB pother major banks have also decided to reduce
incentive payments following the revelation in the financial services as well as a decline in the
share prices.
After this declaration by the royal commission the shareholders expressed their
disagreement by voting against the proposed plan of the executive remuneration. Experts argue
that following the previous signals received through the proxy voting power of the shareholders,
Australian Council of Superannuation Investors (ACSI), Australian Shareholders Association
(ASA) have also planned to vote against the report of NAB regarding the regarding the executive
remuneration system (Business Insider Australia, 2019).

3EDITORIAL FOR AUSTRALIAN NEWSPAPER
Experts consider this as a bad time for Australia’s economy! As the new remuneration
structure for the executives paved the way for a stagnant economy.
The report which was published during the yearly general meeting of NAB shook the
trust of the shareholders on NAB with the declaration of a substantial reduction in the short term
bonus as well as incentives and other financial services which were provided to the shareholders,
investors by NAB and major Australian banks.
Experts do not consider this declaration as accidental event. Rather, they call it an
inevitable consequence of a substantial fall in the share prices as well as the revelation in the
financial services (ABC News, 2019).
Again, financial advisors argue that, this is going to bring an unprecedented economic
crisis in the country of Australia. This may lead to a reduction in the overall investment in the
economy. Critics also argue that, the fall in the investment will leave a negative influence on the
productivity of Australian economy. The overall productivity of the economy will decline.
Financial advisors also argue that, as a result of the low levels of investment the major
banks of Australia will face crisis. Low levels of investment indicate low rates of loan sanctioned
by the banks. This will hamper the circulation of money in the economy (www.reuters.com,
2019).
Economists consider that, this decision will not only lead to the stagnation of Australian
economy, but also curb the interests of the shareholders. Hence this decision is considered to be
unethical as well as biased. This unethical decision also lower the position of Australian
economy in the world market and also shake the trusts of the indigenous as well as foreign
investors on NAB.

4EDITORIAL FOR AUSTRALIAN NEWSPAPER
References
Business Insider Australia. (2019). NAB is about to cut executive bonuses by up to 30%.
Retrieved from https://www.businessinsider.com.au/nab-executive-bonuses-2018-11.
www.abc.net.au. (2019). Retrieved from https://www.abc.net.au/news/2018-12-19/nab-and-anz-
bosses-face-investor-backlash-on-executive-pay/10634000.
www.reuters.com. (2019). Retrieved from https://www.reuters.com/article/us-australia-banks-
salary/investors-revolt-against-executive-pay-plans-at-tarnished-australian-banks-
idUSKBN1OI059.