Big four bank ANZ has faced a significant shareholder revolt, with the company receiving its second consecutive strike at its annual general meeting on Thursday. A striking 32.3% of shareholders voted against the bank’s executive pay scheme, surpassing the 25% threshold required to trigger a “strike” and enabling investors to potentially spill the board and re-elect the company’s directors. However, the resolution to spill the board did not pass, with only 1.45% of shareholders voting in favor.
The backlash is part of a broader discontent among shareholders following a series of missteps by the bank over the past year. In September, ANZ agreed to a $240 million penalty to settle four separate legal cases brought by the corporate watchdog ASIC. These cases included ANZ’s role as manager in the issuance of a 10-year government bond, where ASIC accused the lender of acting unconscionably.
Financial and Operational Challenges
In addition to legal challenges, ANZ has faced significant operational hurdles. The bank cut 3,500 jobs during the year, leading to considerable backlash against newly appointed chief executive Nuno Matos. Many staff members expressed dissatisfaction with Matos’s ambitious change agenda. The cost of redundancies, combined with fines and other penalties, resulted in ANZ reporting a 14% fall in cash profits to $5.8 billion in the last financial year.
At Thursday’s AGM, Matos acknowledged the bank’s shortcomings over the year, stating, “Despite our good intentions, we have not consistently lived up to the expectations of our customers across all of our businesses.”
“I want to stress to you today that we are going to get back to growth by getting back to basics and relentlessly focusing on customers across every segment and business of ANZ,” Matos added.
Executive Compensation Under Scrutiny
In light of the regulatory failings, Matos, along with other Australia-based executives, will not receive any short-term bonuses for the last financial year. Former chief executive Shayne Elliott was also denied $13.5 million in bonuses related to issues during his tenure. However, Elliott has initiated legal action against the bank, claiming that ANZ breached its agreement with him.
Chairman Paul O’Sullivan emphasized ANZ’s commitment to defending its position. “Outcomes regarding unvested equity for some of our former executives have been, and will continue to be, made as those decisions fall due,” he said.
“This methodical assessment over an extended period is consistent with the intent of the law, in terms of regulation, following the royal commission, ensuring accountability and alignment over time,” O’Sullivan noted.
Environmental and Social Responsibilities
Beyond financial and management issues, ANZ is also under pressure to enhance its climate commitments. Shareholders have expressed a strong desire for the bank to improve its disclosure regarding the financing of deforestation and lending to fossil fuel projects. This reflects a growing trend among investors demanding greater corporate responsibility and transparency in environmental and social governance.
As ANZ navigates these challenges, the bank’s leadership is under intense scrutiny from both shareholders and the public. The coming months will be crucial for ANZ as it seeks to rebuild trust and stabilize its operations amidst ongoing legal and regulatory pressures.
The situation at ANZ underscores the broader challenges facing the banking sector, where regulatory compliance, executive accountability, and environmental responsibilities are increasingly intertwined with financial performance. As the bank charts its path forward, stakeholders will be watching closely to see how ANZ addresses these multifaceted issues.
