Letter to Australian Financial Review re incorrect reporting on CEO remuneration

29 September 2005

Dear Sir

Letter of Clarification

I refer to the article “Who’s on the Executive Hit List” in yesterday’s edition.

I wish to correct the inaccuracies reported in relation to the Commonwealth Bank’s new CEO Ralph Norris’ remuneration arrangements. Mr Norris has not been granted $12 million in shares in three tranches.  Shareholder approval is being sought at the Bank’s 2005 Annual General Meeting in late October.

The claim that Mr Norris will get the shares “if CBA performs only 75 per cent as well as the other major banks” is totally incorrect. The performance conditions for the Bank’s long term incentive plan for its senior executives, including Mr Norris, are clearly set out in the Bank’s Annual Report.

No value accrues to Mr Norris unless the Bank’s Total Shareholder Return at least meets the 50th percentile of a peer comparator group made up of 13 banking and finance competitors, not simply the other three major banks as reported.  To receive the full value, the Bank’s performance must be in the top quartile of that group, ie the 75th percentile.

Yours sincerely

Bryan Fitzgerald
General Manager, Media
Commonwealth Bank of Australia