ANZ cops first pay strike, CEO Shayne Elliott forfeits bonus reward as investors vent over scandal

Angry shareholders have delivered a first strike against ANZ over its bond trading scandal and forced the bank to withdraw a $3.2 million bonus for retiring chief executive Shayne Elliott.

Proxies disclosed for Thursday’s annual general meeting in Melbourne show 38.3 per cent of shares voted against the remuneration report, with ANZ chair Paul O’Sullivan promising to pay “close attention to this feedback ... with appropriate humility and respect”.

The bank also said it had pulled a resolution to approve Mr Elliott’s 2025 long-term bonus, in the form of a grant of restricted and performance rights with a face value of $3.2m, after the chief executive forfeited the payment in the face of a 49 per cent protest vote.

Proxy advisers had expressed concern ahead of the AGM that Mr Elliott and other bosses were not sufficiently penalised for the reputational damage caused by the handling of the bond trading scandal and cultural and risk management failings in its markets division.

While ANZ says it has yet to find anywrongdoing, the Australian Securities and Investments Commission is investigating alleged market manipulation around the sale of $14 billion in Federal Government bonds last year that potentially bushed up borrowing costs for taxpayers.

“What the hell has gone on in the dealing room,” one shareholder thundered at the AGM, which ran for nearly five hours. “It should not be the standard that the board accepts, and it is not the standard that shareholders expect.”

The bank has also been castigated by the Australian Prudential Regulation Authority, which has imposed an additional $250m capital buffer on ANZ to reflect “longstanding concerns with ANZ’s non-financial risk management”, again mainly in relation to the market division and its traders.

The issues have tarnished the tenure of Mr Elliott, who last said he would retire in mid-2025 and be succeeded by former HSBC executive Nuno Matos.

Mr O’Sullivan told shareholders the board believed it had applied “appropriate consequences” on executives for the risk management failings raised by APRA.

Also, the bank is assessing independent reports of its bond trading and awaiting a review of the trading room culture in the markets business.

Mr O’Sullivan emphasised that the board had the discretion to freeze of claw back back potentially lucrative stock rewards for any executives found to have engaged in misconduct.

“The board and the organisation feel very clearly that getting to the bottom of the issues associated with markets and some of those allegations is really important,” he said.

“We’ve had a detailed investigation of what’s gone on in that group.

““Should anything emerge from ASIC’s investigation, we’ve ensured there is significant deferred remuneration due to our executives that we can adjust that. But, at this stage, we’ve not found anything to support the allegations of market manipulation.”

Mr O’Sullivan said key shareholders during meetings in recent weeks had “almost universally” acknowledged that the board had investigated the ASIC and APRA concerns with “independence and appropriate due diligence”.

However, there had also been “a wide variety of views” about how much executives should be penalised.

“It is clear this is an issue where reasonable minds can differ,” Mr O’Sullivan said.

“Your board is paying close attention to this feedback and with appropriate humility and respect, we will ensure we take the lessons into account in our future deliberations.”

Mr O’Sullivan said while most shareholders supported the remuneration report, “a sizeable group is voting against it”

“In addition, while prior to this meeting, we received majority support from shareholders to grant our CEO his long-term variable remuneration , a substantial proportion of shareholders voted against the resolution.”

Mr Elliott had subsequently decided to forfeit the reward and so the resolution had been withdrawn.