Commonwealth Bank chair Catherine Livingstone has apologised over flaws in the bank's systems for stopping money laundering, as shareholders backed its overhaul of executive pay and crackdown on short-term bonuses.
The country's largest bank on Thursday dodged a second strike over executive pay, with 92 per cent of shareholders backing its remuneration report, and director Andrew Mohl facing a moderate protest vote over his re-election.
Several big investors opposed Mr Mohl's re-election as a way of demanding accountability over the money-laundering scandal, but he was still elected with the support of 85 per cent of shareholders, compared with 95 per cent or more for other directors up for election.
Even so, the laundering scandal hung over the meeting in Sydney, with Ms Livingstone facing repeated questions over the August allegations that CBA failed to report more than 53,000 suspicious deposits to the regulator.
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Outgoing chief executive Ian Narev also apologised to shareholders for the bank's handling of recent scandals, saying he'd look back at his tenure with a mixture of "pride" and "sadness" when he left the role at the end of the financial year.
Ms Livingstone said the Austrac allegations did not suggest misconduct by staff, but it was clear the bank was "deficient" in its compliance. It was equally clear the bank's reputation with customers, shareholders and regulators had been damaged, she said.
"As chairman, and on behalf of the board, I apologise sincerely for this deficiency and its consequence," Ms Livingstone said at the meeting.
"Shareholders, I can assure you that these concerns command the highest priority of the board, and we are determined to ensure that our risk management systems, including regulatory compliance, are of the high standard which is expected of us; and that we rebuild trust in the bank."
The bank is also the subject of an inquiry from the Australian Prudential Regulation Authority. Ms Livingstone confirmed the inquiry had started, with a progress report to be published in January.
It was the last AGM for Mr Narev, who will retire at the end of this financial year, and Ms Livingstone said the search for his successor was "well advanced," and it was considering domestic and overseas candidates.
Mr Narev said had a "bit more time to go" as CEO and was "determined to give my best until the last minute of my last day in the job". "[But] when I do leave, it will be with a combination of pride in what we have achieved for you, and sadness for where we have disappointed you."
CBA has in recent years compensated customers who were given questionable financial advice, and relied on outdated medical definitions to reject some life insurance claims.
CBA is Australia's most profitable bank, and Mr Narev admitted the bank had managed credit and market risks much more effectively than "operational risks", and had poorly handled the concerns of some customers who had been wronged.
"What they care about, rightly and understandably, is their own experience. At times, in our dealings with these customers, we have listened poorly, and been too bureaucratic. As chief executive, I take responsibility for that and I apologise for the distress we have caused," he said.
At last year's meeting, more than 50 per cent of shareholders voted against the remuneration report, making CBA the first big four bank to receive a first "strike" on its executives' pay cheques.
However, investors supported changes since then to make the hurdles for executive bonuses more transparent, and Ms Livingstone's move to scrap short-term executive bonuses for this year, alongside a fee cut for the board of directors, in response to the laundering scandal.
BlackRock, which controls about 5 per cent of the voting rights in CBA, said previous concerns about how short-term bonuses were awarded had been addressed after it engaged with Ms Livingstone, and it voted in favour of this year's remuneration report. It backed the board's response to the laundering scandal, and said this would remain a key issue in its engagement with the board.
"We believe the remuneration committee has responded well to shareholder concerns and the board has demonstrated that it will use its discretion where necessary," BlackRock said in a statement.
CBA shares rose 0.3 per cent to $80.82.
