Bank CEOs in Asia Pacific are Taking Home Less Pay in 2009

SINGAPORE, Oct. 28 /PRNewswire-Asia/ --

The Asian Banker CEO special report sponsored by Hay Group shows that banks CEOs in Asia-Pacific relying more on performance incentives:

    * Australian banks pay their CEOs more than any others in Asia-Pacific,
      while Chinese banks pay executives modestly despite being the world's
      most profitable
    * Performance-based remuneration becoming more important in Asia-Pacific
    * Total pay has come down 11.3% since 2007 for the ten top-paid CEOs

The Asian Banker has released its latest evaluation of executive compensation today, a report sponsored by global management consultancy Hay Group. The survey has shown that, while the compensation of Asia-Pacific bank CEOs (and their equivalents) has dipped since the last time the survey was conducted in 2007, banks are increasing their reliance on performance-based pay.

"Asia-Pacific banks are justifiably proud that they have remained profitable and have contained fallout from the global financial crisis, primarily because they are attached to growing economies that need not take excessive risks to see profits," says Emmanuel Daniel, President and CEO of The Asian Banker. "Their top executives appear to be reasonably compensated and the risk culture has not pushed them to seek growth into questionable activities. But the growing emphasis on performance-based metrics may eventually lead into questionable practices if proper safeguards are not put in place."

According to Sylvano Damanik, Head of Executive Reward for Hay Group in Asia, "The issue of determining performance risk and factoring in time horizons will add complexity to the discussion and design of executive compensation programs for banks in Asia-Pacific. Going forward, 2010 will be about alignment of top remuneration with business objectives and balancing sustainable growth with short-term risk mitigation. A 'me too' approach to executive compensation that disregards a bank's operating model and market segment is expensive, ineffective and puts the bank's sustainability and increasingly, the board's reputation at risk."

Australian banks pay their CEOs more than any others in Asia-Pacific, while Chinese banks pay their executives modestly, despite being the world's most profitable

Of the nine Australian banks in the ranking, seven are in the top ten, including the top four spots. ANZ's Mike Smith is the region's best-paid bank head, with total remuneration of nearly $9 million. The CEOs of Commonwealth Bank of Australia, Westpac Banking Corporation and NAB follow him, earning about $6 million each (Appendix I: Listed bank's CEO remuneration ranking).

According to Trevor Warden, Hay Group's Head of Executive Reward, Pacific, "A number of the major banks in Pacific have been / are currently led by overseas executives so the executive talent market for banks here can certainly be viewed as global in nature. Generally, good governance of remuneration in the Australian banking sector has led to executive remuneration packages being fairly well balanced generally and not acting as a lever for the banks to take on more risk."

But in terms of earning power, big doesn't necessarily mean best-paid, and even the president of state-owned ICBC-the most profitable bank in the world in 2008-received a relatively modest $225,000 in total remuneration. In particular, the CEO of Malaysia's largest bank, the state-owned Maybank, earned 5% of his three best-remunerated counterparts at privately-run banks, and less than 10% of his predecessor Amirsham Aziz.

The Asian Banker first published a ranking of the 50 best-paid CEOs (or their equivalents) in 2007. At that time, the listings were led by then-CEO of Macquarie Bank Alan Moss, who took home $15 million. In this year's ranking, Macquarie Bank's current CEO Nicholas Moore has fallen to position seven on remuneration of only $4.7 million.

Performance-based remuneration becoming more important

The top five bank CEOs in the ranking for performance-based remuneration as a percentage of total remuneration are all new appointees, indicating that performance is a major negotiating issue when it comes to succession. Performance has moved up in scale in most of the chart for established and new CEOs alike, especially in the top half. But this is not the case for the new CEOs of UOB and Macquarie Group, however: although they are at the top of this table at 91.6% (position 1) and 86.9% (position 4) respectively, they actually have lower percentages than their predecessors.

Banks in Southeast Asia seem to have caught the performance-based bug, especially Malaysia's largest lender Maybank. Its CEO in 2007 Amirsham Aziz was given 52.1% of his pay based on his performance, while new CEO Abdul Wahid Omar now counts on it for 80.3% of his reward, the largest jump in the listing.

Total pay has come down 11.3% since 2007 for the ten top-paid CEOs

In a difficult year, it is understandable that CEO pay will come down, especially for the six bankers who rely on performance for more than 75% of their total remuneration. In our 2009 survey, the fifty best-paid CEOs received a total of $86.25 million, while two years previous they had received $88.6 million. The difference for the top ten bankers is even greater, however: they received a combined $50 million in 2009, compared to $54.4 million in 2007, a drop of 11.3%.

Read the full report at http://www.thebankingacademy.com/CEOreport.pdf

About The Asian Banker

The Asian Banker is the foremost provider of strategic business intelligence in the financial services industry in the Asia Pacific and Middle East regions. The organization has offices in Singapore, Kuala Lumpur, Beijing and Dubai as well as representatives in Shanghai, London and New York. With a business that revolves around publications, research services, training and forums, the organization is highly regarded in the financial services community for its incisive and independent commentaries on developments in the industry. The company's website is http://www.theasianbanker.com .

For more information, please go to http://www.haygroup.com/sg/press or contact:

     Ananya Dutta
     The Asian Banker
     Email: dananya@theasianbanker.com
     Tel:   +65-6236-6174

     Michelle Low
     Hay Group Asia
     Email: michelle.low@haygroup.com
     Tel:   +65-6323-1668

     Mwamba Kasanda
     Hay Group Pacific
     Email: mwamba.kasanda@haygroup.com
     Tel:   +61-3-9667-2618

     Henry Sheng
     Hay Group Greater China
     Email: henry.sheng@haygroup.com
     Tel:   +86-21-6279-8832

SOURCE The Asian Banker