Within days of Telstra, Australia's largest telco, announcing its new CEO, one of Australia's largest banks, the Commonwealth Bank of Australia has announced its new CEO, Ralph Norris.
As in the case of Telstra, the CBA has disclosed its CEO remuneration agreement to the ASX. Whilst Telstra's was in the form of a concise letter of appointment, CBA's consists of a 2 page covering letter containing some transitional arrangements plus a formal 20 page "Executive Service Agreement".
As with Telstra, CBA's CEO remuneration has 3 elements: base remuneration of $1.9 million per annum, a discretionary annual cash short term incentive of up to $1.9 million and an initial long term incentive allocation of Bank shares to the value of $3.8 million, subject to shareholder approval, achievement of performance hurdles determined by the Board and any necessary regulatory consent.
Similar to Telstra, the service agreement has no fixed term.
However the termination provisions are different. Whereas Telstra or its CEO can terminate on 30 days notice (with penalties early in the term), CBA's new CEO must give 6 months' notice whilst CBA can terminate on 12 months' notice in the first year and 6 months after that. There are the usual rights of CBA to terminate immediately for misconduct.
The differences are interesting: Telstra is about to go through a period of change involving privatisation. CBA has nearly finished its culture change project after privatising some time ago. The differing requirements for a CEO are relected in their employment terms.
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