I can almost forgive Dr Henry for his recent tantrums about the lack of progress on tax reform which he had neglected when Treasury Secretary for 10 years.
But his latest comments are absolutely outrageous. He blames investors for the poor behaviour of banks and investors also for driving up banker bonuses.
Here he is the chairman of NAB which has enjoyed far flung board/executive retreats on his $790,000 salary and responsible for the setting of executive remuneration for NAB and its culture.
Investors have no control over remuneration or culture and limited control over the Board – after all under the three strikes rule it is just about impossible for a diverse range of small holdings to sack a board.
The largest shareholder in NAB is HSBC custody nominees. That is a proxy for other investors and while listed with 23.9 per cent of the shares, HSBC does not have 23.9 per cent of the vote. But in any case, is Ken Henry complaining that banks own banks? So even if his arguement was correct, it is the banks themselves with the control.
And if the Board of NAB does not in fact control the decisions of the bank’s strategy, risk appetite, policy, governance and remuneration, why don’t they resign?
Because his argument is crap. The Board is responsible for all of that and he is the chairman. Stop blaming others Ken for your own errors.
If there is a complex remuneration policy with over 30 pages in its annual report it is because the Board agreed to it. The Corporations Act makes quite clear that the Board has responsibility for the actions of the bank. If Henry wants to abdicate that responsibility he should resign or ASIC should act against him for neglecting his directors duties.
The biggest problem in the banking sector is certainly not investors. It is the principal-agent problem where the Board and Executives are extracting rent from the owners. The terrible behaviour observed at the Royal Commission is due to poor behaviour by Boards and Executives, not investors.
Ken Henry it’s time you accepted responsibility rather than shirking it. If the remuneration practices at NAB need to change, that is something you can act upon. Otherwise step aside and let someone else take over who is willing to act.