CBA bows to pressure over executive pay

(AAP) Commonwealth Bank of Australia (CBA) has bowed to community pressure over excessive managerial incomes, announcing a pay cut to the salary package of its chief executive.

The 10 per cent cut to the $3.12 million base salary of chief executive Ralph
Norris takes effect from July.
The winding back in remuneration comes as the bank moves to preserve jobs through
other wage-limiting measures as the deteriorating economic outlook crimps profits.
CBA says it will not shift jobs offshore for the next three years and is attempting
to avoid a major redundancy program through limiting wage growth to 1.5 per cent for
the 70 per cent of its 40,000 staff that earn less than $100,000 a year.
The bank's board of directors will also have their directors' fees cut by 10 per
cent and CBA's ten-strong executive team will take a five per cent cut to their base
salaries, which range from $800,000 to $1 million a year.
"Although we are one of the strongest banks globally, as we have previously
indicated, we are likely to experience slowing business volumes and higher bad debt
expenses, which will impact upon our profitability," Mr Norris said in a statement
to staff on Friday.
"Typically, in such situations, organisations embark upon major redundancy programs
which, while addressing pressures in the short term, often leave organisations
significantly under-resourced to respond to the inevitable recovery.
"To this end, in order to preserve jobs as best we can and tailor our costs to a
weaker economy, the board, which froze its directors' fees for the current financial
year, has now decided to cut its directors' fees by 10 per cent for the coming
year."
Middle management roles, which pay more than $100,000 per year, will be subject to
a 12-month freeze on both base salaries and short-term incentives, CBA spokesman
Bryan Fitzgerald said.
Executives at the bank's New Zealand arm, ASB Bank, will also take a pay cut, the
size of which is undisclosed.
Mr Fitzgerald told AAP that the bank decided on the 1.5 per cent remuneration
threshold due to the government's decision to pay a bonus to taxpayers earning less
than $100,000 as part of its $42 billion stimulus package.
CBA had given a commitment to avoid moving any jobs offshore for the next three
years and would retain its call centres and operations processing centres in
Australia for the same period, Mr Fitzgerald said.
"There was a decline in our half year 2009 profit and Ralph (Norris) and the
executive committee leading from the front by volunteering to take the pay cut was a
good example," he said.
The Finance Sector Union (FSU) welcomed the executive pay cuts and the CBA's
commitment to avoid redundancies, saying the efforts to rein in costs may have
preserved possibly thousands of job losses.
"That has probably saved literally thousands of jobs which we understand may have
been under review by the bank," FSU director of national policy Rod Masson said.
"If they have committed not to send jobs offshore, then they have distinguished
themselves among other banks," Mr Masson said
"The 1.5 per cent (pay rise) is certainly well below the CPI amount as it's tracking
and employees of CBA would still be doing it tough."
Mr Masson said the FSU wanted a legally enforceable guarantee that CBA would not cut
more jobs, after its BankWest arm announced 400 jobs would go last month.
Mr Norris made a commitment to preserve jobs at BankWest when CBA acquired the
lender from HBOS Australia last year.
CBA shares closed up 24 cents at $37.00