Livingstone: "Hybrid remuneration schemes have “unintended consequences”, i.e. they currently don’t focus enough on the long term outcomes…
In 2016, the CBA Board knew about charging fees-for-no-service, the AUSTRAC scandal, misselling consumer credit insurance and the CommInsure scandal - yet the Chief Risk Officer reported “no risk issues or risk behaviours” that should limit executive bonuses!
The CBA risk report used to determine remuneration was grossly inaccurate and didn’t recommend any reduction in bonuses despite a string of customer rip offs.
The CBA Risk Committee report for FY2016 is damning. Clearly compliance was not a serious consideration for executive remuneration
CEO Narev claimed he wasn’t aware of any risks that should stop execs getting their bonuses in 2016, despite a series of scandals rocking the bank.
What today’s #BankingRC clearly shows is that the Federal Government needs to give the BEAR some teeth and extend it to conduct regulation.
Risk is apparently a ‘gate opener’ for CBA senior executives bonuses, but in 2016(!) Ian Narev saw no problem with risk performance - and the Remuneration Committee agreed!
Some interesting discussion so far. Executive renumeration is clearly at the heart of some big issues in banking, and yet what real penalities do we see so far at an individual level?
If anyone from the Community has any opinions on today’s revelations or questions for the team, please jump in!
Hayne to CBA “Do scorecards give an appeareance of precision of what is a matter of judgement?” Touché
Using a Roy Morgan customer satisfaction survey is a poor proxy for how well the bank is delivering to customers. Misses anything that’s not public or causing major pain to small groups of consumers.
Despite APRA’s explicit warnings, still 75% of CBA’s long term bonus for executives are determined by the financial returns of the company.
As much as CBA like to claim they’ve turned a corner - nothing has changed!
Since FY2011, CBA has not reduced an executive’s bonus for a risk event that was not yet public. Livingston accepts that this sends the wrong message - just don’t get caught.
Livingstone: It would be ‘awkward’ to name individual CBA execs who should have had their bonuses reduced to zero… Isn’t this kind of accountability exactly the chair’s role?!
Problem is that we have a tame circus bear, and not a wild one.
Livingstone is doing a very fast two-step, 1. covering her own behind with perfect memory of her righteousness - not backed up by the Minutes, and 2. trying to justify what is really malfeasance by the Board & senior executives.
it’s all smoke, mirrors, and insincere apologies.
Firing these people won’t make any difference, as another corporation will hire them to do the same again.
Nothing short of personal responsibility in the form of jail time will change the culture in the large businesses.
Due to APRA’s findings, the CBA Board requested that former Chair David Turner give back 40% of his earnings from his final year.
But surprise, surprise - he declined!
The CBA board decided not to publicly report that the ex-chair had refused to return pay earned during the scandals. Took the money and ran
Hayne: Beyond financial results, metrics are poor at uncovering employee behaviour - how is an employee rewarded for not recommending an inappropriate product?
Hayne drills down into the problem of using financial metrics to assess performance.
He provides an example of a bank teller who says, “I could sell you this, but you don’t really need it. That employee has acting perfectly properly. It’s difficult to assess that.”