Former Commonwealth Bank President David Turner refused to refund 40% of his director's fees when asked by the council, an application that has never been made public, the Royal Banking Commission has heard.
CBA chairman Catherine Livingstone said Mr Turner, his predecessor, was asked to surrender charges in response to leadership failures in a review of the Australian prudential regulator last year.
Mister. Turner, who granted $ 14.2 million bonuses to executive executives of the bank in just 10 minutes despite scandals, refused to return the fees because he "did not recognize" the board of CBA he knew " in the APRA report.
In a three-hour move on Wednesday, the bank's red committee heard that the CBA had violated the law by not registering Mrs. Livingstone's challenge to managing the money laundering scandal in the minutes of the official council.
Ms. Livingstone acknowledged that the Board's assessment in 2016 was "inappropriate," there was an "impression" that executives were punished only if their failures became public and that its annual report of 2018 was not appropriate.
Ms. Livingstone served as CBA Director in March 2016 and was appointed President on January 1, 2017.
Not in a few minutes
After she lost her memories Tuesday afternoon, she reminded on Wednesday morning that it was a board meeting in October 2106 when it became clear that the leadership did not have the capacity to respond to a serious, escalated and systemic problem with AUSTRAC " t or would not be ".
But the minutes of this meeting contain no mention of Mrs. Livingstone's question – or the answer she said she received. She said that it is not necessarily the case that the minutes of the board record every conversation that takes place, but the senior board assisting the committee, Rowena Orr, QC reminded that it is a "significant change".
Ms. Orr pointed out that Article 251A of the Corporate Law requires commissions to keep the correct minutes and was offended not to do so.
The investigation examined the executive pay, hearing former CEO Ian Narev and current CBA deputy chief David Cohen calling for executive directors to receive full bonuses in 2016.
"Was the CBA's approach now to wait until a risk appeared publicly before imposing any consequences because it could not manage that risk?" Mrs. Orr asked.
"I do not think that was the intention, but it could be the impression created," Mrs. Livingstone said.
Mister. Turner has recommended Mr Narev to receive 108% of the short-term target bonus in 2016 – $ 2.8 million – despite the media's disclosure of the CommInsure scandal that damages his reputation.
Former wealth manager Annabel Spring saw the bonus cut 5% in 2016 and 30% in 2017. Ms. Livingstone said it should have been reduced to zero.
The group's management salaries were reduced by 10% in 2017. Ms. Livingstone said that "in the light of the subsequent events was obviously inadequate, which is why I subsequently made the subsequent adjustment in the context of the CBA procedure."
After the AUSTRAC dossier was filed in August 2017, the council lifted Mr Narev and the short-term bonus of his group's directors. The board decided not to change its long-term bonus, although Ms Livingstone argued that this would also be cut off.
Between 2011 and 2017, there were only seven cases involving five CBA directors, where short-term bonuses were reduced due to a risk issue and with one exception involving reductions of 20% or less. The bank never reduced an executive's short-term salary during this period for a risk issue that had not yet been made public.
Not my problem
After the APRA's prudential investigation revealed the board's malfunctioning within Mr Turner, the former president was invited by the board of directors to reimburse 40% of the commission paid to his director in his last year at the bank – but refused. (Mr. Turner was paid $ 437,521 in FY17 and $ 874,521 in FY2016.)
"Why did he ask the council to ask the former president to return these taxes?" Mrs. Orr asked.
"Because the council has considered it appropriate as a president that he is effectively participating in the reduction that we have all effectively done what has been described in the APRA report," Mrs. Livingstone said.
So why did not you make that clear in your pay report?
"Because the former chair did not agree to return a toll," said Mrs. Livingstone. He told another member of the board that he "did not recognize the CBA board he had known in the APRA report."
When group directors were told in 2017 that they had lost all variable pay in the short term, Ms. Livingstone said their responses varied.
"Some people immediately accepted, some were upset, and others felt that because it affected the whole group, including people who were not there for too long, it was not right," she said.
Commissioner Kenneth Hayne also punished CBA for the quality of disclosures in his annual report, which does not demonstrate why an executive salary has cut their salaries. She agreed that this could be improved.
CBA was also put under pressure to calculate 75% of long-term executive bonuses based on "total shareholders' return". APRA has suggested banks reduce dependence on this measure. Ms. Livingstone said the CBA did not, but "goes through a full review of the remuneration framework."
Commissioner Hayne also attacked the use of "balanced score books," suggesting that "the degree of specificity and detail that apply to the truth serve to mask the lack of a critical judgment on what really matters." Ms. Livingstone said that the CBA "is struggling" with the way in which variable remuneration is set, and that "it is currently looking at our remuneration framework as we continue to develop it."