CBA Cuts Executive Pay

Post by Sharat on April 20, 2009 · Under Australian Economy, Business News, Company News, banking · Comment

Australian banking major, Commonwealth Bank of Australia (CBA) has announced that the lenders chief and entire board of directors will receive pay cuts in an effort to save jobs. Chief executive Ralph Norris and the company directors have agreed to an across the board 10 per cent pay cut to their base salary.

CBA also said that its executive committee which is comprised of executives who run various business units will see their base salaries cut by 5 per cent.

CBA Chief Norris said that although the lender counted itself amongst the strongest banks globally, he added that slowing business volume and rising bad debt would affect the banks profitability.

“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.” Mr. Norris said according to the Business Spectator who said it obtained the comments from an email it had obtained.

CBA employees who take home $100,000 in base salary, will not receive an increase for at least 12 months, whilst those earning less will see pay increases of 1.5 per cent.

Mr. Norris earned a base salary of $3.1 million last year, although his total remuneration totalled $8.7 million, according to the bank’s annual report.

Those at the executive general manager, general manager or executive manager level will also miss out on any increase in base pay or short-term incentives for 12 months.

“The current economic environment is a particularly difficult one and I hope you will agree that this course of action is in the overall best interest of our team, our customers and our shareholders as we endeavour to save jobs, service our customers and provide a reasonable return to our shareholders, Nevertheless, I firmly believe that the commitment we have made over recent years in focusing on our customers and strengthening our business will see the Group come out of this crisis in a very strong position.” Mr. Norris said.

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