ANZ chairman John Morschel has been forced to fend off shareholder criticism of the $10.1 million pay packet granted to chief executive Mike Smith, saying the bank risks losing Mr Smith if it cannot offer him competitive pay.
Mr Smith, the country's highest-paid banker, became the latest boss to face shareholder dissent over chief executive pay at the bank's annual meeting in Perth on Wednesday.
While 95 per cent of shareholders voted in favour of the remuneration report and a move to grant Mr Smith another $3.2 million in performance rights, the Australian Shareholders' Association and several investors at the meeting branded the pay deal excessive.
In response to the complaints about Mr Smith's package - worth about $26,000 a day - Mr Morschel conceded it was "a lot of money".
However, he said it was "perfectly reasonable" when compared with the pay of executives who ran similar-sized banks overseas, citing ANZ's market capitalisation of $70 billion and its $5.7 billion in annual profits.
Mr Morschel credited Mr Smith with leading the bank's push into high-growth Asian economies.
"The growth and performance over Mr Smith's reign has been excellent," he said. "He saw us through the global financial crisis and he is now taking us through the journey of becoming a super-regional bank.
"I understand shareholders' concern that it is a lot of money.
"But it is what global banking senior executives are being paid today, and the last thing we want to do is, quite frankly, risk losing Mr Smith to an overseas competitor."
Mr Smith was this year approached to run the troubled British bank Barclays but later said he had not been interested in the job because it would involve entering "political hot water".
"They couldn't pay you enough to do that," he said in September.
After one person at the meeting suggested ANZ be prepared to let Mr Smith go to another bank, Mr Morschel replied: "I suggest that you have the opportunity to let go . . . by selling your shares."
When previously issued share incentives are taken into account, Mr Smith will receive almost $20 million in remuneration this year.
The debate comes as generous pay packets in banking face growing scrutiny, with National Australia Bank chief executive Cameron Clyne last week facing a 21 per cent protest vote on pay after the bank's profits fell sharply in the previous year.
Bank profit growth is slowing due to weaker demand for credit and higher costs. ANZ on Wednesday said the outlook would remain challenging, with industries in the economy's slow lanes unlikely to fill the gap left after the looming peak in resources investment.
In particular, Mr Smith said trade-exposed industries such as tourism and retail would face a "difficult adjustment" over coming years.
"There are enormous opportunities given Australia's growing linkages to Asia but, at the same time, we have an economy in transition as a result of a strong dollar and weak business and consumer confidence," Mr Smith said.