The seventh annual Australian Board Remuneration Survey by The Governance Institute and McGuirk Consultants found an 11 per cent drop in the remunerations for chairmen and their directors in the financial and insurance industry.
This followed an 11 per cent increase the year prior and was out of line with the rest of Australian boards where chairs and directors saw average remuneration increase by three and four per cent respectively.
Financial and Insurance industry executives such as managing directors and chief executives saw their pay packets drop by 10 per cent and 21 per cent respectively after huge increases in 2017-18.
Chief executive of the Governance Institute of Australia Megan Motto said it was clear that the effects of the royal commission was being felt by the financial institutions.
“The commission exposed multiple examples of poor corporate culture, poor ethics and risk management, leading to a number of board and executive resignations.
“Beyond that, there has been serious brand damage, hefty fines for poor conduct and, in some cases, criminal proceedings where the behaviour has been outright illegal,” she said.
The bill for customer remuneration was still increasing said Ms Mottot and that was being felt by the reduced packages of boards and executives.
“The customer was not put at the centre of the experience, and their organisations are paying the bill. That bill is of course then flowing down to board and executive remuneration,” she said.
The data also reflected a recent survey that showed an industry concerned about the regulator effects coming out of the royal commission said Ms Motto.
“This data also reflects the Governance Institute’s Risk Management Survey released last week, which showed that the financial services industry is extremely concerned about the regulatory effects, brand damage, and liability effects coming out of the banking royal commission.
“The leaders and boards of these organisations are seeing this reflected in their remuneration packages,” she said.
