BREAKINGVIEWS-ANZ's aggrieved shareholders make wrong protest vote

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Updates to add graphic.

By Antony Currie

MELBOURNE, Dec 19 (Reuters Breakingviews) - Anger and frustration have a tendency to cloud a person's judgment. That appears to have happened en masse to a large chunk of ANZ ANZ.AX investors. On Thursday, a third of the $72 billion Australian bank's shareholders rejected its executive pay plan – the second time in a year it has failed to get the 75% support required. They have a right to feel aggrieved: years of scandals and failures resulted in regulators hitting the bank in September with the country's largest-ever corporate fine. But investors are focusing their righteous indignation on the wrong target.

Sure, the Australian Securities and Investment Commission was blunt in its assessment of ANZ's shortcomings: its securities unit had indulged in "unconscionable conduct in services provided to the federal government", while "widespread misconduct" riddled its retail bank. On Friday, the Federal Court of Australia, tasked with approving the settlement with ASIC, increasedthe A$240 million ($159 million) penalty by A$10 million.

Executives deserve to pay for these breaches on their watch. But here's the thing: they already have. Most of those ultimately responsible are no longer at the bank, including former CEO Shayne Elliott, who ended his nine-year tenure in May a little earlier than planned. And in response to the transgressions, to the lender's ho-hum financial performance, and to the 39% vote against the remuneration plan at last year's AGM, ANZ's board decided to withhold or claw back A$32 million in executive pay. Elliott, who is set to forfeit A$13.5 million, including the A$3 million he gave up last year, is now suing the bank for its decision.

Meanwhile, new boss Nuno Matos and several current executives are either foregoing or not receiving their short-term bonus this year. Just how big the quantum of punishment should be is up for debate; proxy advisers CGI Glass Lewis and Institutional Investor Services argued it should have been higher and so recommended shareholders vote against the pay plan.

But there is no doubt that past and present executives have been held accountable. The one person who has so far escaped owners' scrutiny is Paul O'Sullivan. Much of the wrongdoing happened during his five years as ANZ chair, making him part of the problem. Yet 95% of shareholders voted for him to remain on the board on Thursday, though he has since said he's likely to leave before his three-year term ends. If they had their priorities straight, investors would have taken matters into their own hands and made him the target of their protest vote.

Follow Antony Currie on Bluesky and Linkedin.

CONTEXT NEWS

ANZ Chair Paul O'Sullivan on December 18 said the bank may yet claw more pay back from executives after a series of governance and other failures that resulted in a A$240 million ($159 million) fine earlier this year, the largest the Australian Securities and Investment Commission has ever imposed on a single company. On December 19, the Federal Court of Australia ruled that the A$40 million portion of the fine covering problems reporting secondary market bond turnover was insufficient, increasing it by A$10 million.

O'Sullivan made the comments at the lender's annual meeting, where shareholders rejected its executive compensation plan. Needing 75% of the votes, the resolution received the backing of just under 67%. It's an improvement on last year, when only 61% supported the annual remuneration report.

ANZ has already said it will claw back A$32 million from past and present executives. That includes A$13.5 million from Shayne Elliott, who stepped down as CEO in May; he is now suing the bank over the clawback.

(Editing by Robyn Mak; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on CURRIE/antony.currie@thomsonreuters.com))