Australia and New Zealand Banking Group (ANZ) said yesterday that it will scrap bonuses for about four-fifths of its staff, excluding top management, after an inquiry identified a culture of greed at Australia's top financial firms.
The move marks an overhaul of its compensation structure by Australia's No. 4 lender after the government-backed inquiry, known as a Royal Commission, found that flawed incentives led to misconduct.
ANZ chief executive officer Shayne Elliott said: "The Royal Commission rightly shone a light on the negative impact the over-emphasis on individual bonuses within a bank can have on customers and the community.
"We are taking action to rebalance the way we pay people so that variable remuneration is a smaller part of our people's take-home pay, with these reduced bonuses to be determined by the overall performance of the bank."
From Oct 1, individual bonuses for about 80 per cent of employees will be replaced by a group performance dividend, which will be determined by the lender's performance across a variety of factors, ANZ said.
The changes exclude about 20 per cent of executives who play a major role in deciding the bank's performance, and whose remuneration structure will continue to include an "at risk" bonus, ANZ said. The bank's annual remuneration spend will not change, it added.
We are taking action to rebalance the way we pay people so that variable remuneration is a smaller part of our people's take-home pay, with these reduced bonuses to be determined by the overall performance of the bank. ''
MR SHAYNE ELLIOTT, chief executive of Australia and New Zealand Banking Group.
Last year, the lender said it would stop paying bonuses to financial planners for selling its products.
The subject of pay for top executives has also attracted the attention of the country's prudential regulator, which last month said it intends to prescribe stricter terms on compensation policies to enhance accountability.