Westpac chief takes $500,000 pay cut as bank slashes executive bonuses
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Westpac chief takes $500,000 pay cut as bank slashes executive bonuses

Westpac chief executive Brian Hartzer has seen his pay drop nearly 10 per cent after a year in which profits were flat and the bank was hauled across the coals at the royal commission.

All but one Westpac group executive had their short-term cash bonuses cut, according to the 2018 remuneration report released on Wednesday.

Westpac CEO Brian Hartzer and other senior executives had their bonuses reduced in the wake of the banking royal commission.

Westpac CEO Brian Hartzer and other senior executives had their bonuses reduced in the wake of the banking royal commission.Credit:Brendon Thorne

Mr Hartzer's cash bonus was down about $450,000, or 30 per cent, to $1.04 million this year. He also forfeited $4.26 million of a long-term bonus he had been awarded in the prior year.

Mr Hartzer's total realised remuneration dropped 9.4 per cent, or $512,325, from $5.46 million to $4.94 million.

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It follows a 23 per cent pay cut for ANZ chief executive Shayne Elliott earlier this week, who earned nearly $1 million less during a year marred by revelations of misconduct across the Australian financial sector. Mr Elliott received $5.25 million in remuneration in the 2018 financial year, compared with $6.2 million in 2017.

Westpac's remuneration decision comes after its shares fell 12.5 per cent over the year to September.

"The board recognises that Westpac needs to continue to improve the way it prevents, detects and addresses misconduct," the bank said in its annual report.

"The board also recognises that the value of your shares has declined over the year."

Across the focus areas used to calculate remuneration, Westpac top executives only met targets for balance sheet management, and people and culture. They fell short on economic performance, risk management, customer service transformation, and customer outcomes.

Long-term variable bonuses were not awarded for the third consecutive year.

The board [...] recognises that the value of your shares has declined over the year.

Westpac's annual report

Acting Westpac chief financial officer David Lees, who only commenced his role in June, received a $90,500 bonus and no cut. Chairman Lindsay Maxstead earned $830,181 in salary and superannuation for the year.

Westpac bank on Monday delivered flat profits of $8.1 billion for the year to September, including big declines in second-half profits in wealth and retail banking, triggering questions over the bank's strategy in the trouble-prone wealth sector.

Its main rivals have opted to cut their exposure to wealth management in recent years. Mr Hartzer said the bank had thought carefully about its involvement in the sector, and quit some parts of the market, such as funds management.

In Westpac's flagship retail banking arm, earnings fell 17 per cent in the September half compared with March, to $3.14 billion. The bank said this was caused narrowing profit margins, higher provisions for customer refunds, and lower revenue from credit card and ATM fees.

Its wealth management arm, BT Financial Group, posted a 40 per cent decline in profits in the September half compared with March, to $645 million. BT was also hit by higher remediation costs and a squeeze on profit margins. Westpac is the only lender of the big four that remains fully committed to the wealth management sector, with its rivals selling off most of their wealth businesses.

AAP, with BusinessDay