Financial Review Newspaper Editorial: Executive Remuneration

This assignment is a report analyzing a Financial Review newspaper editorial focusing on the controversy surrounding executive remuneration within the National Australia Bank (NAB). The editorial discusses the shareholders' concerns regarding the new remuneration structure, including a reduction in short-term bonuses and incentive payments. The report examines the potential negative impacts on the Australian financial sector, including decreased investment, reduced loan rates, and the risk of economic stagnation and inflation. The editorial highlights expert opinions, shareholder revolts, and the implications for Australia's position in the global economy. References from various news sources are included to support the analysis, illustrating the broad impact of the issue and the differing perspectives of stakeholders within the financial landscape.

Running Head: FINANCIAL REVIEW NEWSPAPER
FINANCIAL REVIEW NEWSPAPER
Name of the Student
Name of the University
Author Note

2FINANCIAL REVIEW NEWSPAPER
Shareholders Raised their voice against New Executive Remuneration
It’s a bad time for the financial sector of Australia! The new remuneration structure
declared by the NAB report suggests that.
The report published during the annual general meeting of NAB gave the shareholders a
shock by declaring a 30% decline in the short term bonus, incentive payments, as well as other
financial services. Experts argue that this declaration is not accidental; it is just the reflection of
the revelation in the financial services as well as a decline in the share prices.
According to the financial advisors, this will bring an unprecedented hard time for the
financial sector of Australia, leading to a substantial decline in the investment. As argued by the
critics, the decline in investment will cast upon a negative impact on the productivity as well as
growth of the economy as a whole (ABC News, 2019).
Some experts are able to foresee the predicaments surrounding major banks in the
Australian economy. According to them, the lower is the investment; the lower will be the rate of
receiving loans from the banks. This will again, affect the circulation of money in the economy.
The Financial Planning Association of Australia argued that, the decrease in the
productivity accompanied by the lower arêtes of the circulation of money will lead to a stagnant
situation. This will again lead to a situation, where there will be an excess demand and
decreasing levels of supply in the economy. As the natural flow of this vicious circle, inflation
will grasp the economy.
Observing the upcoming financial revelation of this misconduct by the bank, experts are
saying that the financial sector of Australia is about to face the toughest time.

3FINANCIAL REVIEW NEWSPAPER
According to news published by several media 88% of the shareholders, have planned to
raise their voice against the remuneration structure as described by NAB reports. The report
which contains new remuneration structure was published during the annual general meeting of
NAB. The investors intend to call this new executive remuneration structure ‘blunt’ as well as
‘harbinger of the failure’ for an economy that follows capitalist approach (Business Insider
Australia, 2019).
After the declaration of the royal commission stakeholders have conveyed their
disagreement strictly and voted against the proposed remuneration as well as the incentive
structure for the executives. 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(www.reuters.com, 2019).
According to the statement of the investor, Chris Schacht, "To put it bluntly, in the
capitalist system, the board and senior management are failed capitalists,". This statement of
Christ has now become a major concern to the economists of Australia. Economists argued that
this declaration of NAB has raised questions regarding the position of Australia in the world
economy.

4FINANCIAL REVIEW 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.