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Should more banks cut exec pay?

21 April 2009

COMMENTS

These cuts will save CBA about $120 million a year - rival banks will be tempted to follow.  Read all comments »

CBA chief executive Ralph Norris is taking a 10% cut to his base salary and the bank is slicing directors' fees by the same amount.

Is it time that other banks follow CBA's lead, with bosses showing that they too can sacrifice their salaries for the sake of their firm?

ANZ and NAB are already rumoured to be considering similar pay cuts as they prepare to report half-year results. ANZ chief executive Mike Smith is one of the most richly rewarded banking top brass, on $3m a year, ahead of Westpac chief Gail Kelly's $2.7m and NAB head Cameron Clyne's $2.5m.

But is salary slashing really an effective way to reign in costs? Perhaps so - the Commonwealth exec cuts, and a salary freeze for staff earning more than $100k, could trim 4% off the bank's total wage bill, saving $123m a year, according to a report in The Australian.

Is CBA cowering as the Aussie public get angry about fat cat pay? Or is it making a sensible business decision? Let us know below.

COMMENTS

sitdown, Information Services,  Tue 21 Apr 09

The symbolic PR value is much more important than cost cutting, 4% of wage costs will be an even lower percentage of overall costs, so the saving, while significant, won't exactly make the earth move

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barry, Commodities,  Tue 21 Apr 09

They are making up for past mistakes...

"Commonwealth's executive remuneration increased by nearly 20 per cent over the past six years, while net profit rose less than 15 per cent and total shareholder return was less than 5 per cent. "

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CBAman, Capital Markets,  Tue 21 Apr 09

The workers are suffering at CBA too - those under the $100,000 will get a  1.5 % rise - not their normal 4%

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Fifi, Corporate Banking,  Tue 21 Apr 09

These cuts will save CBA about $120 million a year - rival banks will be tempted to follow.

Add your comment »

guest, Corporate Banking,  Tue 28 Apr 09

People in the institutional bank divisions should take the biggest haircut - no salary increases and no bonus.

The loans the institutional bank made are responsible for the sky rocketing bad debts and provisioning that is killing the banks profits

These guys should take the hit more than the retail businesses

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Isha, Investor Relations / PR,  Sat 09 May 09

Yes I really believe and agree with CBA man 21 that workers with less than 100k suffers.

CBA renumeration is a shocker maybe the human resourcing department should update their market salary knowledge. Most of these CBA HR staff are really incompetent.

CBA/CFS is paying BDMs and account managers above market and they have not provided reasonable flows in the past 3 years.

CBA, NAB, and ANZ executive should follow Macquarie's salary package. It is the grass roots employees who work hard.

Massive cut to CBAs executives, cut to human resourcing staff, pay cut on CFS distribution BDM and account managers is a good place to start saving.

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