Shared values only blackrock’s pru bennett understands nab’s ken henry

With AMP chairman Catherine Brenner myopically clinging to the door handle by her fingernails, the words of Treasurer Scott Morrison – that "the boards of these organisations are the custodians, really, of the governance and I am sure that will have plenty of attention as the [Royal] Commission carries on its important work" – on Friday will still be ringing in the ears of every company director of every bank, insurer and wealth manager in the country.

One contribution we almost missed in the throes of national flagellation was that of former Commonwealth Treasury secretary Ken Henry at last week’s 2018 Shared Value Summit Asia Pacific in Sydney.

If you’re wondering what the intended purpose or explicable theme of this gathering was, well, you’ll just have to keep wondering. Presumably, it was something to do with ameliorating one’s guilt via empty, righteous gestures while trousering shit-tonnes of money. Tellingly, the Shared Value Project is chaired by Peter Yates, the former chief executive of Allco Equity Partners (a role mysteriously absent from his sanitised curriculum vitae). If only Yates had managed to privatise Qantas – he’d be sharing its value right now with the likes of Pan Am and TWA!

Henry, speaking as National Australia Bank chairman on a panel comically entitled ‘Money: the leadership and investment required to achieve both strong social and financial returns’, grumbled that institutional investors had "insufficient appetite" for non-financial metrics to be included as benchmarks for bonuses in banks’ executive remuneration schemes, which is "not just frustrating for boards or other investors, it’s also frustrating for regulators". This followed Australian Prudential Regulation Authority chair Wayne Byres describing as "disappointing" the Commonwealth Bank receiving a first strike against its FY16 remuneration report, whose incentives were linked to non-financial targets.

Who could blame them? Absurdly, Turner walked out of that annual meeting in Perth and conflated the damning judgment of his shareholders with "why Donald Trump was elected or why people voted for Brexit… this sort of anti-establishment issue… because there’s some element of life that we feel is slightly unequal, that we’re not totally happy about, and here’s a part of that; [banks are] a perfect target". Mercifully, he refrained from scapegoating Mabo, the Constitution and the Vibe.

Remember, a fortnight before the vote, the Australian Securities & Investments Commission announced that the big four banks and AMP had incorrectly charged their clients $178 million (excluding interest) for services not provided between 2008 to 2015, and that CBA accounted for $105.7 million (ex-interest) of that figure, all of which was refunded to the affected customers. "In line with CBA’s conservative approach, this amount was fully provided for in prior years." Yet the board awarded Annabel Spring, the executive running this division of the bank, 95 per cent of her FY16 bonus.

All major proxy advisers and institutions voted against that remuneration report, except BlackRock. There’s Pru Bennett’s social activism hard at work again! "Based on significant engagement with the chairman, it was decided to support the remuneration report [and the re-election of all directors] at this time." Yep, Pru and her pearls scored an audience with old man Turner. That’s reason enough to turn a blind eye to the bank’s negative social returns for virtuous BlackRock unitholders.