Exit not so horrible for NAB’s $20m man Andrew Hagger

The Australian 12:00am September 18, 2018

Michael Roddan, Ben Butler

NAB’s head of wealth Andrew Hagger will exit with redundancy payout of up to $796,000, as the highest-profile casualty so far of the banking royal commission.

Mr Hagger, who has trousered more than $20 million over his decade at the bank, agreed to fall on his sword at the weekend after his evidence to the banking royal commission over his dealings with the corporate regulator during NAB’s fees-for-no-service scandal were lashed by counsel assisting, Michael Hodge QC.

He is to be replaced as NAB’s most senior customer-facing executive by former NSW premier Mike Baird. Mr Baird will move from chief customer officer, corporate and institutional, to the same role at consumer banking.

Mr Hagger’s is the first scalp from the big four claimed by royal commission hearings that have already sparked the exit of AMP’s chairman, chief executive and chief legal officer, and shuttered smaller operations Dover Financial and Henderson Maxwell.

Company documents show Mr Hagger has taken home an average of about $2.5m a year in statutory pay since 2009, including $4.1m in 2016 — the year in which it emerged NAB had fleeced its superannuation members out of $35m in fees charged where no service was provided.

Last year, Mr Hagger’s pay fell to $3.5m. But the banker also holds about $771,000 in fully-paid NAB shares, according to last year’s ­annual report, and has more than $11m in yet-to-be-paid performance rights.

In 2015, NAB paid Mr Hagger a one-off “retention award” worth $550,000, which was the only such payment made to one of the bank’s executives that year, tied to some performance targets. “Mr Hagger is important to the business and its transformation in the medium term,” the bank said at the time.

While Mr Hagger’s nest egg has been feathered by NAB, savers in the bank’s MLC-branded super funds have not fared as well. The royal commission heard NAB’s MLC Super Fund MySuper and the MLC Staff MySuper funds were ranked among the worst performing in the country. The commission heard NAB was very reluctant to forgo profits and provide its super managers with extra money to invest in higher-earning assets for its members.

Last month former Commonwealth Bank boss Ian Narev suffered forfeited incentives that outweighed his $2.9m salary and termination payment, as the bank stripped long-term bonuses worth $14m from the former banker.

But the fate of millions of dollars in bonuses and shares NAB showered on Mr Hagger last year remains unclear. Last year he also earned a bonus of $480,000 and was granted shares and options worth $1.7m, the 2017 annual report shows. Mr Hagger has been made redundant from his role. The annual report and NAB’s enterprise bargaining agreement show this makes him entitled to 35.9 weeks of pay at his base rate of $1,154,125 a year.

A NAB spokeswoman declined to answer questions about Mr Hagger’s payout, his 2018 bonus and whether there would be any clawback of prior-year awards.

Mr Hagger, who bought a GranTurismo Maserati in 2016, the year after his one-off mega-bonus, has benefited from rocketing pay even as the bank’s fees-for-no-service scandal unfolded. During commission hearings last month it emerged Mr Hagger failed to tell the Australian Securities & Investments Commission of a far larger updated fees-for-no-service figure during a phone call with commissioner Greg Tanzer in October 2016, but claimed he left a “very open door” to the regulator to ask him for an updated number.

“We submit that Mr Hagger’s description of the call as ‘open and transparent’ is not accurate,” Mr Hodge said in his closing submissions, which NAB rejected.

Mr Hagger, who was previously touted as a potential future NAB chief executive, said: “I take accountability for what has ­occurred on my watch.”

His departure, set for October 1, is among a number of executive changes announced by the bank yesterday.

NAB’s customer products and services division is to be rebadged “customer experience”, and headed by Rachel Slade. Mr Baird will move from chief customer officer, corporate and institutional, to the same role at consumer banking.