CBA CEO takes 10pct pay cut, staff 1.5pct pay rise =3D3 Melbourne
17 Apr 2009 3:57 PM
MELBOURNE, April 17 AAP - Commonwealth Bank of Australia (CBA) Ltd chief executive Ralph Norris will take a 10 per cent cut to his base salary of $3.12 million from July 1, the bank says.
Mr Norris' pay reduction is part of program of base salary cuts among senior managers and directors at the CBA aimed at staving off redundancies amid the slowing economic outlook.
The cuts to senior remuneration comes as the bank agrees to a 1.5 per cent pay rise for most other staff, also to preserve jobs, as profits come under pressure from slowing business volumes and higher bad debt expenses associated with the economic slowdown.
CBA announced to staff on Friday that Mr Norris, along with the bank's directors and executive committee, will take pay and fee cuts.
In an internal communication, Mr Norris told staff the bank's board of directors will have their fees cut by 10 per cent in the coming financial year.
CBA told AAP that its 10-strong executive committee will take a five per cent cut to their base salaries, which currently range between $800,000 and $1 million.
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"Although we are one of the strongest banks globally, as we have previously indicated, we are likely to experience slowing business volumes and higher bad debt expenses, which will impact upon our profitability," Mr Norris said in a statement to staff on Friday.
"Typically, in such situations, organisations embark upon major redundancy programs which, while addressing pressures in the short term, often leave organisations significantly under-resourced to respond to the inevitable recovery.
"To this end, in order to preserve jobs as best we can, and tailor our costs to a weaker economy, the board, which froze its directors fees for the current financial year, has now decided to cut its directors' fees by 10 per cent for the coming year."
Middle management roles, which pay more than $100,000 per year, will be subject to a 12-month freeze on both base salaries and short-term incentives, CBA spokesman Brian Fitzgerald said.
Staff earning under $100,000 a year - about 70 per cent of the bank's total 40,000 permanent positions - would receive a 1.5 per cent pay rise from July 1, Mr Fitzgerald said.
The bank decided on this remuneration threshold due to the government's decision to pay a bonus to taxpayers earning less than $100,000 as part of its $42 billion stimulus package, he said.
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As well, CBA has given a commitment to avoid moving any jobs offshore for the next three years and to retaining its call centres and operations processing centres in Australia for the next three years, Mr Fitzgerald said.
"There was a decline in our half year 2009 profit and Ralph and the executive committee leading from the front by volunteering to take the pay cut was a good example," he said.
CBA had an almost fivefold increase in impairment expenses to $1.607 billion which hit CBA's first half cash profit posted in February.
Its core half year earnings measure fell 16 per cent to $2.013 billion.
However, net profit for the six months ended December rose nine per cent to $2.573 billion, after strong lending and deposit growth at its retail banking arm.
At 1555 AEST CBA shares were up 44 cents or 1.2 per cent at $37.20.
