Belligerent Shareholders Strike Out At Banks

By Glenn Dyer | More Articles by Glenn Dyer

Now for the AMP next May after three of the four big banks took hits from upset shareholders at annual meetings in November and December.

The AMP balances its 2018 financial year at the end of this month and will reveal a massive loss something in early February – a result that the new management team will claim is ‘behind’ the company now which is set to lift its game and is a reborn organisation.

But we have heard this before (twice in the case of the AMP since the late 1990’s as it suffered huge losses from poor investments and rotten management and board oversight).

The AMP is a laydown certainty to join the NAB (81%), Westpac (64%) and ANZ (34%) in recording strikes against their remuneration reports from upset shareholders.

No doubt chair, David Murray will wax lyrical on change and how things are going to improve, but the ’no’ vote for the AMP should at least be as high as the NAB’s 88.1%.

ANZ chair David Gonski acknowledged the concerns of his bank’s shareholders and said he would “work hard” to better align executive pay with shareholder interests. Similar comments came from NAB chair, Ken Henry on Wednesday, and last week, Westpac’s Lindsay Maxsted.

We have heard these sorts of comments before at the annual meetings of companies under pressure, and the outcome has been similar in each case; things improve until the next crisis, profit downgrade or scandal hits and the cycle starts all over again.

In the case of the banks it was the royal commission that exposed these comments as meaningless twaddle.

Here’s hoping we don’t have to call another inquiry to expose the next lot of underperformance, managerial incompetence or worse.

After their abuses and misdemeanours were laid bare at the Hayne Royal Commission over most of this year (and not forgetting the AMP), December saw three of the big four banks facing shareholders at end of year annual meetings for the 12 months to September 30.

The trio – NAB, ANZ and Westpac – had done everything to keep shareholders happy in 2017-18 by maintaining dividends at high levels, even though profits were weak and under pressure.

The 4th, the Commonwealth, went further, lifting its payout 2 cents a share over the year, a move that was to help it survive (surprisingly) without a strike when meeting time came around in November.

The CBA’s AGM saw the remuneration report carried with a stunning 92% vote. That was despite the long-running Austrac money laundering scandal which cost the bank well over $700 million, plus revelations at the royal commission about charging dead people fees for no service (they don’t vote).

It seems shareholders in the Commonwealth Bank were more forgiving than those at the meetings a month or so later for the other three.

The CBA removed CEO Ian Narev and several directors and an executive clean out which might have helped assuage shareholders, but the final session of the royal commission cast some doubt on the performance of the board and chair, Catherine Livingston. Had that been known before the AGM, a higher ‘no’ vote might have emerged.

Or was it a case that big shareholders had realised they had let the CBA off the hook by cravenly supporting the remuneration report and turned against Westpac, and the NAB, and to a lesser extent, the ANZ, to make up for that lapse in judgement?

Westpac saw a 64.16% vote against its remuneration which up to the NAB’s 88.1% on Wednesday of this week was is the largest ‘no’ votes against any company’s remuneration report since the 66% vote against Telstra in 2007 when it was run by controversial CEO, Sol Trujillo (That ‘no’ vote included the large holding of the Future Fund in Telstra at the time 11 years ago).

The NAB’s record-breaking 88.1% vote against its remuneration report came as angry shareholders described the bank’s performance as “grovelling” and “disconnected” at Wednesday’s annual meeting.

And the ANZ took a smaller, but still first strike vote of 34% against its remuneration report (a first “strike,” is a vote of more than 25% against a company’s remuneration report.

Even though some claim the royal commission has cost shareholders billions of dollars in lost value, it hasn’t.

If the malfeasance, incompetence and worse had not been there in each of the big four, plus the AMP and other insurers, the inquiry would have found very little and the share prices of the financial groups would not have been as badly hit as they have this year.

Shareholders, in the end, will benefit from investments in groups that have cleaned up their acts.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →