Cusomer Satifaction? A Big AAA Failure...
CBA chief gets a $4 million carrot to keep customers happy
- by: Jane Harper
- From: Herald Sun
- October 03, 2013
CUSTOMER satisfaction and shareholder returns. Get them right, and Commonwealth Bank chief Ian Narev will enjoy a lucrative bonus in four years.
The CBA has offered to give its chief executive a bonus pool of shares, worth $4.23 million on current values, in 2017 if the bank hits key performance targets.
Shareholders will be asked to vote at the annual meeting next month on the "group leadership reward plan" for Mr Narev, who received a pay and perks package of $7.8 million for the year to June.
In order to qualify for the bonus in 2017, he must drive the bank to meet two performance hurdles based around shareholder returns and customer satisfaction.
Three-quarters of the bonus pool depends on the bank's shareholder returns ranking in the top 25 per cent when compared with 20 of the Australia's largest companies.
The remainder hinges on CBA topping the big four banks in customer satisfaction surveys on average over the next four years.
CBA has hitched at least a portion of its chief executive bonus pool to customer satisfaction in recent years.
If both targets are hit exactly, Mr Narev will receive 62,966 shares.
If the goals are only partially achieved, the bonus will be reduced on a sliding scale depending on performance.
"The group leadership reward plan aims to focus the efforts of participants to support superior shareholder returns and customer satisfaction," CBA said in its notice for the annual meeting yesterday.
This was in order to achieve "the bank's vision through long-term value creation", it said.
CBA chalked up a record annual profit of $7.8 billion for the year to June - the biggest profit ever reported by an Australian bank.
Shares in the group closed flat yesterday at $71.70.