The market participants are keeping a close watch on the banking sector in Australia primarily because of the misconduct which was highlighted by the Royal Commission. Because of this misconduct, the banks have lost their footing in terms of trust and confidence which might severely impact the performance. However, the initiatives which focus on gaining back the trust of the customers might help the banks. The chief executive officer or CEO of National Australia Bank (ASX: NAB) named Andrew Thorburn as well as senior executives have reduced their pay under the new pay system which has been brought by the bank’s chairman named Ken Henry. This decision from one of the big four banks in Australia can be considered as a response to the revelations which was done by the Royal Commission.
As per the annual report of National Australia Bank, the remuneration of Mr. Thorburn witnessed a decline of 31% to $4.4 million. According to Dr. Henry, the latest annual report would be containing the information about new remuneration policy which has been formed in order to regain the trust and confidence of the customers after the misconduct on which the Royal Commission threw light. Earlier, the bank was criticized for being engaged in unethical practices like charging the fees to the customers without rendering the services. As per the new policy which can be considered as an attempt to improve the image, the bankers would be getting the base salary as well as single variable reward. There would be no short-term as well as long-term bonuses. The bank has plans to meet the institutional investors so that the new methodology can be discussed. Moreover, the annual general meeting or AGM of the company is also fast approaching in which the shareholders would be asked about their opinions with respect to the changes.
As per National Australia Bank, the new and fresh framework which has been introduced helps in abolishing the complexity as well as encourages the performance which reflects the interests of the stakeholders of NAB. The development revolves around the engagement with the investors, regulators as well as executives and also with proxy advisors. In addition, it also focuses on delivering exceptional services to customers. As per the new policy, of the total variable pay, 40% has to be disbursed in cash and the remaining 60%, which needs to be disbursed in the shares, is deferred for the four years, and the allocation would be done at face value and not at the fair value. The bank stated that this provides transparency and is also simpler.
At the time of writing, the stock price of National Australia Bank is trading at A$23.740 per share which implies that the price has witnessed the fall of A$0.140 per share or 0.586%. The bank has an annual dividend yield of 8.29% and has the market capitalization of $65.29 billion. The stock price of the bank is trading in the lower range.
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