13 Dec 2019
Westpac Banking Corp on Thursday became the biggest Australian company to have shareholders vote down its executive pay for a second year, at a marathon annual meeting dominated by investor outrage over a child exploitation payments scandal.
The “second strike” delivers a symbolic blow to the country’s oldest bank and fifth-largest listed company as it seeks to reassure owners and customers it can find reasons and solutions for its deepest crisis in decades.
It also puts a cloud over the annual meetings next week of rivals Australia and New Zealand Banking Group Ltd (ANZ) and National Australia Bank Ltd (NAB), with investors expecting details of NAB’s engagement with regulators as it has also flagged weakness in money-laundering controls.
“We are shattered by what has happened,” Westpac Chairman Lindsay Maxsted told about 600 investors at an emotional six-hour meeting in Sydney.
“It’s a total anathema to what we stand for,” added Maxsted, who brought forward his retirement in light of the scandal.
Westpac was sued three weeks ago by Australian regulators who cited 23 million breaches of anti-money laundering laws, in the country’s biggest ever such scandal. Westpac has said it accepts most of the regulator’s assertions – which included the facilitation of payments to child exploiters – and its chief executive and compliance head have quit.
The bombshell lawsuit, coming as the country was still digesting a damaging financial misconduct inquiry, has sent Westpac’s shares down 9.3% in the three weeks since it was announced, wiping A$8.8 billion off its market value. The bank could pay a fine of more than A$1 billion ($678.60 million), analysts have said.
The stock closed down another 1.2% on Thursday, while the broader Australian market was down 0.7%.
“All of us are members and owners of a company that, even at the best, you could say accidentally allowed child abuse to go on for five years,” said Chris Schott, a former Australian senator, at the meeting in his capacity as a shareholder.
“It’s inconceivable someone didn’t have the wit to think something was wrong,” added Schott, who told the meeting he voted for the establishment of AUSTRAC while in office.
Several Westpac directors narrowly survived protest votes against their re-election but shareholders voted down the company’s executive pay plans for a second year running. Under Australian law, a second vote against executive pay triggers a separate vote on whether to remove the whole board.
Just 9% of investors voted for the “board spill” motion, though, due to support from large institutional shareholders, sparing the company further humiliation and upheaval at the top.
“We acknowledge we should have implemented more robust transaction monitoring earlier than we did. This would have generated more suspicious matter reports to AUSTRAC,” Maxsted said earlier in prepared remarks.
By Scott Murdoch and Byron Kaye, Reuters, 12 December 2019
Read more at Reuters
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