National Australia Bank Ltd. will scrap its revised executive pay structure, as shareholders voted down its remuneration report at its annual general meeting held Dec. 19.
More than 88% of shareholder votes cast on the measure voted against it.
"[T]he board is hearing loud and clear that our new scheme is not right. We tried, but we got it wrong. We are listening to you. We will try again," Chairman Ken Henry noted in his address at the annual general meeting.
NAB earlier announced an overhaul of its executive pay structure, as well as a 32% cut in CEO Andrew Thorburn's pay for 2018.
Henry added that the board received feedback from shareholders that their votes against the measure were due to factors including the change in the design of the remuneration scheme, the amount of remuneration, and how the bank's board has applied the scheme for the 2018 fiscal year.
Under Australian corporate law, a "first strike" occurs when a company's remuneration report receives 25% or more "against" votes at the annual general meeting. A "second strike" occurs if the company's subsequent remuneration report for the following year also receives 25% or more "against" votes. Upon a "second strike," shareholders can vote to remove the entire board.
Meanwhile, NAB's peers Australia & New Zealand Banking Group Ltd. and Westpac Banking Corp. were also hit with a "first strike" against their remuneration reports.
This comes as a parliamentary inquiry, known as a royal commission, into Australia's financial services sector in 2018 uncovered misconduct in the industry. In an internal assessment, NAB admitted to shortcomings, conceding that it did not always focus on customer interest in its decision-making processes.