BNZ chief executive Andrew Thorburn, 48, will step up to the top job as CEO of parent company National Australia Bank from August after NAB announced the 'retirement' of the current CEO Cameron Clyne, who is 46.
BNZ will announce a replacement for Thorburn in NZ "in due course"
Thorburn's fixed salary will be A$2.2 million, which is less than the $2.6 million fixed salary Clyne was on as of last year, but compares more than favourably with the A$1 million fixed salary Thorburn received at BNZ last year. Additionally, Thorburn will have short and long term performance incentives, which could on any given year push his package out to around A$9 million. (See details further down article)
Clyne, also a former head of BNZ immediately prior to Thorburn, said leading more than 42,000 NAB employees and strengthening the culture and reputation of the organisation was the most rewarding role of his career . But he said the job had "taken a personal toll" and it was now time to retire from executive life. He was leaving to "spend some much-needed time with my young family".
"We have built a strong foundation for future growth with the revitalisation of the personal bank, grown our already strong position in business banking, and achieved material improvements in customer satisfaction and reputation. We have also worked methodically through our legacy issues while still making transformational change in our technology ," Clyne said.
Thorburn said his "excitement" at moving to Australia to take up his new role was tinged with sadness at the prospect of leaving BNZ after more than five years, in addition to the 14 years he had previously spent in New Zealand.
"At BNZ, I have worked with a brilliant bunch of people who care deeply about what they do for New Zealand. My time at BNZ has challenged and developed me as a leader. It has given me a real pride in the contribution this company, and indeed the banking industry as a whole, makes to the sustainable prosperity of New Zealand."
NAB chairman Michael Chaney said he was pleased that the company’s succession planning processes had enabled the board to choose someone from within the organisation "who has the ability and the vision to take on the role of CEO of the group".
He described Thorburn as an outstanding banking executive who has been part of the NAB Group Executive team that developed the Bank’s successful strategy focusing on building a stronger Australian and NZ franchise.
"Andrew Thorburn has done a superb job leading Bank of New Zealand ( BNZ ) since 2008, where he continued to build the bank’s performance, increasing cash earnings by more than 240 per cent, improving market share on the back of strong customer satisfaction and developing a strong leadership culture.
"As CEO of BNZ, Andrew has gained extensive experience in all of the component parts of running a full service commercial bank. BNZ has delivered consistently strong results, reflecting a focused and disciplined approach to implementation of the strategy. In the course of his time at the Bank, Andrew has also had responsibility for NAB’s Asian and US operations. As a member of the Group Executive team, his energy, vision and ability to motivate employees have been obvious as has his business acumen," Chaney said.
On Clyne, Chaney paid tribute to his "exceptional leadership".
"Cameron took over as CEO during the global financial crisis and developed an effective strategy to steer the bank through a challenging period during which it has undergone significant cultural and structural change.
"He is highly regarded throughout the bank and externally, and we are sorry to see him leave at this time. Cameron has built strong leadership across the organisation, a stronger balance sheet, improved the Bank’s culture, enhanced its reputation and dealt with a number of legacy issues. As a result of his efforts, NAB is well positioned for the future."
This is the statement from BNZ:
Bank of New Zealand (BNZ) chairman John Waller announced today that CEO and managing director Andrew Thorburn will be leaving in order to take up the role of Group CEO of National Australia Bank, BNZ’s parent company, from August this year.
Mr Waller said, “I congratulate Andrew on his appointment and wish him the very best in his new role at the helm of one of our region’s great companies.
“The BNZ board sincerely thanks Andrew for his inspirational leadership of the bank at a truly challenging time, beginning in September 2008 as the global financial crisis was unfolding.
“Andrew has led the company with passion and confidence, and helped to sustain a strong and highly-engaged staff culture that has underpinned BNZ’s solid financial performance throughout his tenure.
“In Andrew’s time with us, BNZ’s cash earnings increased from $557m in 2008 to $788m last year. Deposits increased from $24bn to $38bn, and we’ve achieved a world class cost-to-income ratio of 40.3%. In customer satisfaction categories, BNZ is number one or two across the board.”
Mr Waller confirmed that a replacement for Andrew Thorburn at BNZ would be announced in due course.
Andrew Thorburn said his excitement at moving to Australia to take up his new role was tinged with sadness at the prospect of leaving BNZ after more than five years, in addition to the fourteen years he had previously spent in New Zealand.
“At BNZ, I have worked with a brilliant bunch of people who care deeply about what they do for New Zealand. My time at BNZ has challenged and developed me as a leader. It has given me a real pride in the contribution this company, and indeed the banking industry as a whole, makes to the sustainable prosperity of New Zealand.
“I’m grateful to John Waller and his fellow board members for the support and encouragement they’ve given me, and also to other members of BNZ’s executive team for their focused leadership of the company.
“The ultimate bedrock for me has been my wife and family. They’ve been my greatest champions.
“I’ll be moving countries, but will get back to New Zealand as often as I’m able.
“One of the real privileges of a job like this is the insights and interactions it provides. BNZ’s presence extends to just about every part of New Zealand, and we support the homeowners, businesses, farmers and entrepreneurs living there. I’ve enjoyed getting to know these New Zealanders, and seeing the positive difference BNZ can make to their lives.
“For BNZ the past five-and-a-half years have been a time of great change, innovation and adaptability. We have helped New Zealand businesses to grow and prosper, we have spent hundreds of millions of dollars in support of local suppliers, and we have helped New Zealanders to be good with money in a myriad of ways that matter to them.
“The lesson for me is a clear one. For all the sophistication of its technology and systems, I know that banking is fundamentally a business based on relationships between people: our own people who come to work for us every day, our customers, and the communities of people that sustain us.
“And BNZ has always done the right thing when it counted, such as during the aftermath of the devastating Canterbury earthquakes. We lent more money to local businesses than any other bank as the GFC unfolded. This work, and the attitude that underpins it across BNZ’s 5,500 people, will continue under my successor.”
Looking ahead to his new role, Mr Thorburn said that NAB was very well positioned to build on its strengths.
“Under Cameron Clyne’s leadership NAB revitalised its personal bank, maintained a strong position in business banking, strengthened its technology capability, and managed the UK business into a better state than previously.
“There are still many challenges for us but we have a good foundation and have carved out a strong reputation for doing good in distinctive ways, as shown by NAB’s fair value agenda, financial inclusion and support for indigenous Australians.
“While I’m sad to be leaving the day-to-day leadership of BNZ’s people, I’m also very excited at the opportunity to be the leader of a NAB team that is 42,000-strong. A unified team of that size, and focused on the right priorities, can achieve anything,” Mr Thorburn said.
Here are background details on Thorburn:
• Born in Melbourne, Australia.
• Married with three adult children.
Joined National Australia Bank in 2005.
• Appointed Managing Director and CEO, Bank of New Zealand in October 2008.
• Previous role at NAB - Executive General Manager, NAB Retail (2005 –2008).
• Chairman of Great Western Bank, 2010.
• Co-Chair Australian-New Zealand leadership forum, 2012.
• Director of New Zealand Initiative, 2013.
Prior to Joining NAB:
• St George Bank, Group Executive, Personal Customers (2002 –2004).
• Commonwealth Bank / ASB Bank Group (1986 – 2002) in a variety of roles including:
o State General Manager, Western Australia, Commonwealth Bank;
o Chief Manager, Marketing Communications, Commonwealth Bank, Sydney;
o Chief Manager, Retail Banking, ASB Bank, Auckland; and
o Regional Manager; ASB Bank, Auckland.
• Master of Business Administration, with Distinction, University of Durham (UK).
• Bachelor of Commerce, majoring in Economics, University of Auckland.
• Diploma of Marketing, Chartered Institute of Marketing (UK).
• Fellow of Australasian Institute of Banking and Finance.
NAB provided the following details on Thorburn's conditions of employment:
The Board of National Australia Bank Limited outline the terms of employment for the incoming Group Chief Executive Officer, Andrew Thorburn.
In announcing the details, NAB Chairman, Michael Chaney, said “The Board and the Remuneration Committee believe that, in the current market, it is appropriate for the incoming Group Chief Executive Officer to start on a lower package than the current incumbent. Mr Thorburn is supportive of this decision. The package on appointment aligns with our pay for performance philosophy. It is strongly aligned to shareholder expectations with 70% of the total package being “at risk”. This ensures that remuneration will not be earned until there is genuine individual and organisational performance.
The contract will be effective 1 August 2014 when Mr Thorburn commences as Group Chief Executive Officer. It is not a fixed term contract and, therefore, does not have an end date.
Termination The notice period specified in the contract is 26 weeks by either Mr Thorburn or the company, except in the case of redundancy where the current enterprise agreement notice terms apply. In the case of misconduct there is no notice provision. Post Employment A 6 month restraint provision is applicable.
The duties of Mr Thorburn are those expected of a CEO in a global financial services organisation, reporting to and receiving directions from the Board. Performance will be assessed against a range of financial, risk, customer and employee metrics along with compliance against all regulations and internal policies as applicable.
There are three components of Mr Thorburn’s remuneration as Group Chief Executive Officer:
• A base salary of $2,200,000 per annum (inclusive of statutory superannuation contributions and any salary sacrifice arrangements). It will be reviewed annually in accordance with the Group’s remuneration policy.
Short Term Incentive:
• A short term incentive target of 100% of base salary ($2,200,000) with a maximum opportunity to earn 175% of base salary should performance exceed set targets.
• Half of any short term incentive will be paid in cash, half will be deferred over two years in performance rights per assurance requirements within the plan rules.
• No dividends will be received on deferred incentive amounts.
Long Term Incentive:
• A long term incentive award of 130% of base salary ($2,860,000), allocated in performance rights. This will be allocated subject to shareholder approval at the AGM in December 2014.
• Vesting is subject to performance against Total Shareholder Return hurdles over a four year period to ensure alignment with shareholder expectations.
• No dividends will be received from this award.