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Our latest media release: ASA concerned re non-performance hurdles in remuneration structures

Media release: 26 September 2016

The Australian Shareholders’ Association (ASA) is concerned with the increasing number of companies introducing qualitative, non-financial performance hurdles into their executive remuneration structures.

There has been media comment about the $12.3 million received this year by the CEO of Commonwealth Bank (CBA), Ian Narev. More than half of this amount resulted from the vesting of prior long-term incentive awards.

ASA Director Allan Goldin said, “Our bigger concern is that the CBA Board has changed its bonus structure to make it easier for Mr Narev and his successors to continue to receive large payouts in the future.”

Previously, CBA executives were measured against total shareholder return (TSR) and customer satisfaction hurdles for their long-term incentives.

In the 2015/6 financial year CBA did not meet its TSR hurdle. Under the new changes the TSR component of the long-term incentive, which used to be worth 75%, has been reduced to 50%. A new hurdle measuring progress in the areas of diversity and inclusion, sustainability and culture will constitute 25%.

“Whilst the changes reflect important sentiments in reality, where hurdles are based on qualitative measures which we see quite often in the short-term incentives, there is so much flexibility in interpretation that payment of the bonus will effectively be up to the Board to decide." Mr Goldin said.

Further media coverage:

'What are we paying bank CEOs for?'

CBA, Telstra, Woolworths, Origin and AGL face backlash on 'flaky' bonuses



It is not only the CEO Commonwealth bank gets hand outs but the staff get shares each year of service not sure how many or the conditions of this but one em;love told me they got shares each year