Big four bank ANZ has announced that its employees will no longer receive variable remuneration, effective from October this year, in response to the banking royal commission.
The reform to remuneration is part of the bank’s initial response to recommendations from the royal commission and will reportedly lead to better outcomes for customers, shareholders and the community.
In a statement, ANZ said the only variable remuneration most employees will receive will be in the form of a group performance dividend, which is based on the bank’s performance from a risk, financial, customer, people and reputation perspective.
This will replace the bank’s previous engagement of individual bonuses for employees.
The changes, applicable from 1 October 2019, will not impact the spend on total compensation, according to the bank, and will instead affect the mix between fixed and variable remuneration for employees.
Commenting on the announcement, ANZ chief executive Shayne Elliott said that “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,” he outlined.
The changes were reported as not being applicable to ANZ’s executive committee, whose remuneration is structured in accordance with regulatory requirements.
A small percentage of people “in mostly senior roles” who have an increased ability to impact on ANZ’s performance will still have a portion of “at risk” pay that will be determined by business unit and individual performance, it was explained.
According to ANZ, this will comprise a smaller proportion of total compensation with appropriate deferrals in place.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.