This was published 7 months ago
BOQ shareholders reject executive pay after ‘difficult year’
By Millie Muroi
Bank of Queensland shareholders have delivered a blow to the company’s remuneration report as the bank acknowledged the difficult year investors faced amid leadership changes and enforceable undertakings, and warned of growing economic risks in the year ahead.
At the bank’s annual meeting on Tuesday, 40 per cent of shareholders voted against its executive pay, constituting a first strike (where at least a quarter of shareholders vote against a company’s remuneration report). Nearly 60 per cent voted in favour of it.
BOQ chief executive Patrick Allaway said the bank expected the lagged impact of interest rates and cost of living to weigh on the economy into the new year.Credit: Dan Peled
The vote came as the company was slugged with a $50 million capital penalty, and entered into two separate enforceable undertakings in May for breaching prudential standards and falling short in its compliance with anti-money laundering laws.
BOQ chief executive Patrick Allaway said the company’s performance was affected by higher costs, continued investment as it attempted to catch up on historical underinvestment in technology, and stepping back from a highly competitive mortgage market, while warning of increased economic risks next year.
“While the Australian economy remains resilient, we do anticipate increasing economic risks into next year, lagged impact of sustained high rates, combined with [the] increased cost of living,” he said. “We’re expecting continued revenue and margin pressure from slower credit growth, ongoing heightened competition and our higher relative cost of funding.”
The bank has also faced investor concern about leadership stability following the swift removal of former chief executive George Frazis last year and its high turnover of executives more broadly.
BOQ chair Warwick Negus said he recognised it had been difficult year for shareholders.
“The board acknowledges that these enforceable undertakings have eroded some of the trust you have in us, and we do not take these matters lightly,” he said.
“Though our financial performance for the year was impacted by industry-wide margin compression, as demonstrated in recent reporting from banking peers, we have been particularly challenged with disproportionate regulatory cost, the impacts of inflation and earlier repayment of the Reserve Bank’s term funding facility compared to our peers.”
The bank’s share price – which has plunged 23.7 per cent over the past year – fell 3.3 per cent to $5.46 each at the close.
Negus said the remuneration report put forward by the company reflected consequences for the board, with Allaway foregoing all his 2023 financial year bonus, and downward adjustments to all current and former participating executives.
Non-executive director Bruce Carter was re-elected to the board, with Negus saying he would provide stability and continuity while the company addressed its legacy risk issues. However, Carter was dealt a heavy blow with 36 per cent of investors voting against him, amid concerns he may have too many other commitments, including chairing three other companies.
Asked about BOQ’s relationship with PwC, Negus said he was comfortable with PwC conducting the bank’s external auditing and that changing firms was “a big deal”.
“I don’t want to go into what’s affecting their organisation,” he said. “Every year ... PwC confirms their independence, and they demonstrate their independence, so we’re satisfied with PwC. But we are committed to tendering our audit work on a regular basis as per the guidelines as a listed company.”
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