A big annual meeting ahead for the Commonwealth Bank in early November,
and at the end of it you can bet that the bank’s $20 million man, CEO
David Murray, will be lord of all he surveys, well except perhaps for a
new chairman.

He’ll have around $7 million of shares to replace an options grant that
wasn’t completed, he will have a new chairman closer to his age, the
board will be smaller, the disliked Finance Sector Union will have been
put in its place, and he will be one of the masters of the Sydney
business universe, with the ‘Which New Bank’ remake well underway and
hopefully his next coup.

In short, no matter what they might say publicly and for the record,
David Murray, after 12 years at the helm, will still be the Big Man
at the CBA.

And with a new chairman, a former peer CEO at Esso and Pioneer, John
Schubert. At 61, Schubert is 10 years younger than the retiring John
Ralph and only five years older than Murray who is 55.

Schubert too will be able to look out across the sea of shareholders at
the AGM on November 5 in Sydney and reflect that he also has reached
the top of the corporate tree in Australia, after years of hard
networking and effort.

He appeared to have sidelined himself by moving to head up the Business
Council in the late 90s, but didn’t do much to lift its effectiveness.
Remember all that guff at the end of the 90s and around the year 2000
about the ‘hollowing’ out of Australian business and
the ‘branch office’ economy that spewed out of the BCA and its spokes
people. And of course there was all that hand wringing about missing
the net, tech and Telco booms and being marginalised. Complete rubbish.
But the BCA wasn’t alone.

Murray lost well over $40 million in a punt on an internet mortgage business in the UK, but that’s been buried and forgotten.

But Schubert’s time at the BCA was remembered because no other CEO
type figures with a good profile wanted the job. Schubert kept it
going, however dodgy the policy pronouncements, and those who matter in
business took notice and remembered.

Hence his move to the top of the pile. Chairman of a Big Bank, director
of the Big Airline in Qantas and a director of BHP Billiton, a really
Big Miner. You’d be hard pressed to find another director with that blue chip portfolio.

Only Michael Chaney, the Saint from Wesfarmers in Perth will rival John Schubert.

Now he will have to work much more closely with David Murray. That will
be a fascinating contest as both are not short on confidence and
self-belief. You have to have that in spades to climb so high in
business and stay there.

But first thing there’s an annual meeting to be held. The bank’s annual
report and the notice of meeting for the AGM released
Friday, shows a number of major items on the Agenda – check it out here.

And the FSU statement and the bank’s response is here.

Chairman John Ralph’s retirement and replacement by John Schubert will
happen at the meeting, while another director, Ross Adler, the man who
treated Santos like a personal company for years, is also retiring.

The board shrinking its number by two to 10 and seeking a doubling in
non-executive directors fees to $3 million from $1.5 million (makes the
$2.5 million sought by Qantas look respectable).

There’s a brawl with the Finance Sector Union, which has secured the
signatures of 900 shareholders to put a change in the bank’s rules
onto the agenda for the AGM that has no chance of getting up, but which
continues the long running bitterness between the union and the bank
over the CBA’s constant restructuring and changes, all of which has
been driven by David Murray.

A number of other changes to the bank’s constitution are recommended to
reflect the changes in the so-called Clerp 9 corporate laws.

The annual report reveals that David Murray received more than $4 million last year in salary and super and other forms of
compensation, and has a shareholding worth around $15 to $16 million.
There are also options and the annual report discloses the meeting will
be asked to approve the granting of a further 250,000 shares to Mr
Murray as part of an executive compensation scheme. These would have a
gross value of well over $7 million, giving him a net worth
considerably in excess of $20 million.

Readers should remember that in 2002 David Murray was paid a bonus
of $4.65 million or around $465,000 a year for 10 years that was
not disclosed to shareholders. It was a sort of retention bonus struck
at the time of the bank’s privatisation at the start of the 90s to keep
Mr Murray at the bank.

This is what the Notice of meeting says about the proposal to increase
non-executive directors fees “In relation to fees, an amount not
exceeding the amount determined is divided among Non-Executive
Directors as they agree. The last determination was at the
Annual General Meeting held on 28 October 1999, when shareholders
approved an aggregate amount of fees of $1,500,000 per year. The
proposal before the meeting is to increase the maximum aggregate amount
of fees to $3,000,000 per year.”

And on David Murray’s shares offer, “subject to the rules of the Equity Reward Plan”:

2001/2002 – 110,000 shares were granted at a price of $28.43 per share, and
2002/2003 – 90,000 shares were granted at a price of $28.33 per share.

From the beginning of the 2001/2002 financial year, options have not
been granted to executives, with shares only being granted under the
Equity Reward Plan. This was reflected in the composition of the
allocations made to Mr Murray, referred to above.

The Board decided not to issue to Mr Murray invitations to apply for
the 1,000,000 options previously approved by shareholders under the
Equity Reward Plan but to make grants of shares only, which are subject
to vesting conditions, as apply for the other senior executives of the
Bank. That approval by the shareholders for the issue of the options
will have lapsed by the time of this year’s Annual General Meeting and,
accordingly, those options cannot be issued after that date. This
resolution seeks shareholder approval for the grant to Mr Murray of up
to a total maximum aggregate number of 250,000 shares for the 2004/2005
and the 2005/2006 years.

The size of each tranche will be determined by the Board of Directors
taking into account the Bank’s share price at the relevant time in
setting the appropriate remuneration levels.”

It’s clear the shares replace the options which have lapsed. The value
of the small number of shares will equal the net value of the shares if
the options had have been exercised with the strike price of around
$23.84 per CBA share.”

Chairman John Ralph was paid a total of $343,838, down on the previous
year’s $443,261 because of his age(he’s 71) meant a fall in super
benefits.

John Schubert received almost $222,000, so he’ll be looking at a nice
pay rise this year, while David Murray received a total of $4.42
million compared to $4.07 million.

Michael Ulmer who was forced out in a David Murray inspired reshuffle
received a total of $3.3 million for the year(He left in May)
including termination benefits of $845,000.

Ulmer has since found a job at the NAB where he could earn up to $14
million by some estimates, so losing out to Michael Katz at the CBAwas
to his benefit.