Easier and lengthier bonus terms set for Norris
The board of Commonwealth Bank will cut in half the proportion of the long-term bonus payable to its chief executive, Ralph Norris, based on measures of customer satisfaction.The other half of Norris' bonus will now be tied to the total shareholder return, and in practice the relative market capitalisation, of the bank.For the first half, tied to customer satisfaction, the methodology appears to remain the same as set in place three years ago. If CBA ranks first Norris collects the lot. If it ranks second he collects 75 per cent of the bonus, and so on.While the explanatory memorandum for the bank's annual meeting, published yesterday, does not spell this out, based on the past arrangements this slice of Norris' bonus is tied to the Roy Morgan measure of retail bank satisfaction, the TNS measure of business satisfaction and the Assirt measure of wealth management customer satisfaction. CBA is faring better on all three.On the market capitalisation component Norris will qualify for 50 per cent of the bonus shares if CBA's market cap is in line with the media rise, or fall, of the top 20 companies on the Australian Securities Exchange and will receive all the bonus shares if the rise, or fall, in the CBA market cap is in the top five companies.This means at least one quarter of the Norris bonus is near enough to guaranteed.And given the very favourable positioning of CBA thanks to the credit shock, and the steep rise in underlying and reported profits that may well flow over the assessment period of three or four years, Norris is more than likely to collect the market-linked component of his bonus.The arrangement seems a step backward, and this appears to apply to the whole CBA executive team and not just Norris.The other message from the revised arrangements, though, is the inference that Norris, first appointed in 2005, may be sticking around at CBA for another four years at least.