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Shareholders have had several issues with NAB's recently rejigged remuneration structure. Earlier this year,NAB announced it would combine long- and short-term bonuses into a single incentive for its top executives. It also ditched the link between total shareholder returns and included other metrics including conduct.
Investors were particularly concerned about the bonus paid to former bank chief customer officer Andrew Hagger,who left the bank after a train wreck appearance at the royal commission.
Based on the conversations with major investors in the lead-up to the meeting,Dr Henry said more than one-third of the"no"votes were due to the fact that"we have changed the design of our scheme".
"Of the remainder,the'against'votes relate to factors including the quantum of remuneration,
scheme design,and how[the] board has applied the scheme,for the first time,in respect of the 2018 financial year,"he said.
Illustration:Matt GoldingCredit:
"No doubt,there are also many other reasons for shareholders registering a'no'vote
on the remuneration report this year."
Dr Henry said he had been appalled at some of the evidence produced against the bank and its competitors at the banking royal commission.
"We are sorry,"he said.
Dr Henry said NAB could have waited until after the royal commission to rejig its pay structures. A key focus of the commission has been the incentives paid to executives and more junior staff in the banking industry.
"The board came to the view long before the commission started that our executive remuneration scheme was not right,"Dr Henry said.
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"It didn't put enough focus on the management of non-financial risks and conduct matters. And,
there was a risk that our so-called long-term incentive scheme might even be encouraging short-term thinking and value-destroying behaviours."
'Failed capitalists'
Mr Thorburn told the meeting that the royal commission had been challenging.
"We have heard examples of where we have let our customers down;where we have lost their trust;where we haven't acted or fixed things quickly enough,and where we haven't got it right for all our customers,all of the time,"he said.
Shareholder Chris Schott took NAB to task over the bank's performance,saying the value of his shares in the bank had gone backwards over the past 10 years.
Mr Schott praised Dr Henry's statements at the royal commission that there needed to be a greater discussion on the role of capitalism in society.
"The board and senior managers are failed capitalists. You have destroyed billions and billions of shareholder value,"Mr Schott said.
"You're the unacceptable face of capitalism,"he added to raucous applause from other shareholders.
You have destroyed billions and billions of shareholder value. You're the unacceptable face of capitalism.
NAB shareholder Chris Schott
Mr Schott also took aim at the company over saying it would fight any criminal charges laid against its staff,which he said he had read in a newspaper,arguing the bank should not pay for the legal fees of any staffer accused of criminal conduct and questioned why NAB had spent $100 million on events and executive perks because of an alleged fraud against the bank.
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Responding to this comment at the AGM,Dr Henry said:“I don’t know where that comment you referred to came from,I don’t recall saying anything on these matters to any journalist,ever. We will see. We will await,as we should the outcome of the royal commission. We will show the royal commission that consideration. We will see what recommendations are made by the royal commission. I will say I hold the royal commission in great esteem."
Dr Henry acknowledged shareholder concerns about the alleged fraud committed at the bank. Mr Thorburn's chief of staff and an external events company,the Human Group,are subject to a police investigation.
Police investigation
As revealed byThe Age andHerald last month,Mr Thorburn took a luxury holiday to a private island in Fiji and received a thermomix arranged through the Human Group.
No one has been charged as a result of the investigation and Mr Thorburn is not accused of any wrongdoing.
"Andrew is a witness for the police in these inquiries. The NSW Police have asked us not to comment while they are conducting their investigation,"Dr Henry said.
Another shareholder,Lachlan Watts,also challenged the bank over its Human Group issues and the bank's lacklustre share price growth.
"Regularly,we hear these days something to the effect of that,of the four major banks,NAB has had the worst trading in the market,"he said.
"We've gone from the number one bank to the number four bank."