Interim chief executive officer of National Australia Bank Ltd (ASX: NAB) Philip Chronican has just released a letter to shareholders reflecting on the challenges of the past year.
In the letter, Mr Chronican outlined NAB’s issues with earning trust, compensating customers and reassessing executive remuneration.
He acknowledged the failings of the bank and said it has been an “extremely challenging period”.
“We have let down our customers. We have let down you, our owners. And we have let down the community. We have also let down our people on the frontline who do a great job, day in, day out, serving customers,” he said.
Mr Chronican highlighted the NAB’s need to earn back trust in order to move forward, starting with compensating customers who were wronged.
“We also have to focus on earning back trust,” he noted. “That begins with making sure we fix the issues that caused our failures and we pay back customers who are owed compensation as soon as possible.”
NAB has already paid more than $110 million in compensation to over 310,000 customers, but the bank is “stepping up the pace”.
Mr Chronican stated that another key issue will be reassessing remuneration after 88% of shareholders voted against its remuneration report.
“I know you are demanding we address executive remuneration. The Board heard loud and clear that the 2018 remuneration outcomes did not meet your expectations or the community’s expectations,” he said.
Mr Chronican says NAB will be changing its framework to ensure, “it provides the right balance of financial metrics, customer outcomes and the management of non-financial risks over the long and short-term.”
Mr Chronican is currently interim CEO following the resignations of former CEO Andrew Thorburn and Chairman Ken Henry.
Once a new CEO has been selected later in 2019, Mr Chronican will assume the role of Chairman.
The next critical step for Mr Chronican and the Board will be to select the right CEO for the job; someone who can earn back the trust of shareholders and put NAB back in line with the other major banks.
In case you missed it, here’s your 30-second guide to the royal commission report.
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