Paulina Duran

SYDNEY (Reuters), – Australia’s Westpac Banking (NYSE:) Corp was subject to a so-called “first strikes” vote in opposition to executive pay plans during its annual general meetings. Chairman John McFarlane apologised unreservedly for a steep decline in the share price.

McFarlane was nicknamed “Mackthe knife” by the British for his ability to remove CEOs from his chairship. Aviva (LON) Barclays (LON) Westpac also stated that it would start making succession plans to its chief executive.

A majority of bank shareholders voted in opposition to the pay plan. A vote by more than 25% of shareholders next year under Australian law would be enough to trigger a vote about firing the whole board.

McFarlane stated that McFarlane’s protest vote was perfectly acceptable and related to the decline in the share price.

Westpac shares dropped 20% in the past week. The company reported large drops in margins, high expenses and a reduction of earnings expectations on November 1.

Lenders were forced to provide more favorable terms for A$3.5 Billion share buybacks due to the price drop.

McFarlane stated that “Overall the result was disappointing” and pointed out that there was a decline in market value. McFarlane also said that efforts were being made to lower costs.

The performance of Westpac has sparked speculation that Peter King (previously the bank’s chief financial officer) might no longer be able to keep his job.

McFarlane responded to shareholder questions, stating that Westpac will begin succession planning for its CEO. However, King was only recently appointed, and so the plans were “probably too premature”.

“We thought we would consider it during the calendar year. But, it didn’t seem like the right time. We decided to move on and something will start next year.” he stated.

Westpac is now the smallest Big Four lender in Australia by market value. It has also lost its position as No.2, which was also affected by a drop in market share.

McFarlane explained that it hurts OK. It’s not the best position for Westpac. We’ve expected Westpac to be at number 2 in our business mix for a long time. It is also true that the company has not performed in many ways.