Corporate Governance

The Group's internal management is governed by the Company's constitution (PDF, 237KB).

All NAB directors are expected to bring independent and unfettered judgement to Board deliberations. To qualify as ‘independent’, a director must be independent of management and free of any business or other association that could materially interfere with the director’s exercise of unfettered and independent judgement with respect to issues before the Board, and to act in the best interests of NAB and its shareholders.

In considering the independence of each director, the Board takes into account the factors outlined in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3^rd edition).

The Board conducts regular (at least annual) reviews of the independence of each of the directors. Directors are expected to volunteer information as and when changes occur, and each non-executive director is required to make an annual disclosure to the Board of all relevant information.

To further assist in ensuring that the Board operates independently of management, non-executive directors meet in the absence of management at each scheduled Board and Committee meeting.

All non-executive directors of the Board are considered to be independent, as identified in the Report of the Directors in our 2018 Annual Financial Report.

For more information on the Independence Standards (part of the Board Charter) that are considered when assessing Director independence, see the Independent Director Standards (PDF, 103KB).

To assist in carrying out its responsibilities, the Board has established standing Board committees that cover each of Audit, Remuneration, Risk, and Nomination and Governance matters. Other committees are created, with specific remits, as and when required.

Board committees and their respective charters which include information on the composition, responsibilities and administration of each committee are set out below:

• Board Risk & Compliance Committee Charter (PDF, 95KB)
• Board Audit Committee Charter (PDF, 134KB)
• Board People & Remuneration Committee Charter (PDF, 142KB)
• Board Nomination & Governance Committee Charter (PDF, 83KB)
  
• Board Customer Committee Charter (PDF, 117KB)

• Code of Conduct
• Code of conduct- NZ (PDF, 609KB)
• Code of conduct- UK (PDF, 2MB)
• Group Securities Trading Policy (PDF, 227KB)

We aim to be open and transparent with all stakeholders and we are committed to disseminating information to stakeholders in a fair, timely, clear and objective manner.

The Group has adopted a disclosure policy that is designed to:

• ensure we comply with our legal and regulatory obligations; and
• promote investor confidence by ensuring that trade in our securities takes place in an informed market.

We will immediately notify the market on becoming aware of any information related to our businesses which a reasonable person would expect to have a material effect on the price or value of our securities. We do this by announcing such information to the relevant stock exchanges on which our securities are listed.

In certain limited circumstances, the applicable listing rules permit the Group not to disclose such market sensitive information. Our policy also provides that, in general, the Group will not respond to market speculation or rumours unless required to do so by law or the Australian Securities Exchange (ASX).

Where appropriate, we may request a trading halt from the ASX to prevent trading in the Group's securities by an inefficient and uninformed market.

The Group Executive, Legal & Commercial Services is responsible for all communications with the relevant stock exchanges on which the securities of the Group are listed. All releases to the ASX and other relevant stock exchanges are made available on our website.

For more information see the Group Disclosure & External Communication Policy (PDF, 184KB).

The Group aims to be open and transparent with all our stakeholders, including our shareholders, and to make all communications easy to access and in plain English.

Information is communicated to shareholders regularly through a range of forums, publications and online. These include:

• the Annual General Meeting
• notices and explanatory memoranda of Annual General Meetings
• the Annual Financial Report (for those shareholders who have requested a copy)
• the Annual Review (for those shareholders who have requested a copy)
• regular trading updates and market/investor briefings
• letters from the Chairman to inform shareholders of key matters of interest
• the Group's website, providing access to announcements, media releases, financial reports, previous years' financial results and investor presentations.

The Notice of Annual General Meeting (AGM) provides details of the location, time and date of the AGM, the business to be considered by shareholders and details about each candidate standing for election or re-election as a Director. For those shareholders unable to attend the AGM, a webcast is available on our AGM page. Our external auditors attend this meeting and are available to answer shareholder questions about the conduct of the audit and preparation and content of the auditor's report.

Our AGM page also includes responses to questions taken on notice at the AGM.

Creating an inclusive workforce is fundamental to maximising diversity and succeeding in the global environment. At NAB, diversity of thought, background and experience is respected, valued and promoted.

The 2017-2020 enterprise Diversity and Inclusion Strategy (the Strategy) expired in September 2020. NAB has begun to identify areas of focus for its next three-year strategy.

Gender diversity targets FY17-FY20

NAB’s Executive Leadership Team has direct accountability for the execution of the Strategy. The Board receives an annual update on the performance against the Strategy’s measurable objectives.

While NAB has achieved its Board and Subsidiary Boards gender representation target of 40% and increased the representation of women in leadership roles, NAB fell short of fulfilling all its gender targets.

The table below outlines NAB’s progress against gender diversity targets for FY17-FY20:

Gender equality table – 2020 female representation objectives

¹ NAB’s 2020 gender equality targets were set in FY17. Representation for Non-management, Management, Senior Management, and Executive Management calculated using population of permanent full-time and part-time employees, with the exception of NAB Boards (non-executive directors and Group Subsidiary). Actuals and targets are stated as at 30 September for each respective year.

² The Australian Talent population includes employees who have been objectively assessed against evidence-based criteria, and selected by Divisional Leadership Teams as having upward potential.

³ As at 30 September 2020, 50% of the graduates who have accepted positions in NAB’s 2021 Australian graduate program are female.

Workforce diversity

In addition to NAB’s focus on gender equality, the following key initiatives have taken place to support broader workplace diversity and inclusion:

NAB’s Indigenous Recruitment Program

Between 2017 and 2020, NAB has offered 256 traineeships and internships to Aboriginal and Torres Strait Islander people.

NAB’s aim is to uplift its Indigenous workforce to 2% by 2022. This supports our commitments outlined in NAB’s Elevate Reconciliation Action Plan (RAP) 2019 – 2021.

NAB’s African Australian Inclusion Program

505 participants have participated in the program over its 11-year history, gaining meaningful work experience and professional networks to build their careers in corporate Australia.

Employee resource groups

These are employee-led networks that foster a diverse and inclusive workplace. NAB has four employee resource groups:

• Gender Balance – influencing change and action on gender equality and why it matters.
• NABility – looking beyond disability to ability.
• NAB Pride – celebrating all LGBTI+ people for who they are.
• Cultural Inc – harnessing the power of cultural inclusion.

New Inclusion and Diversity Policy and measurable objectives for FY21-FY25

The Board approved a new Group Inclusion and Diversity Policy (Policy) in September 2020, committing to value and respect the diversity of our colleagues, customers, suppliers and communities to seek to ensure a positive experience for all.

The Policy aims to:

• attract and retain diverse teams, enhancing our approach to decision making and innovating for the future
• empower individuals to work and grow together in an inclusive, safe and flexible way
• leverage the diversity of skills to enhance the customer experience and organisational growth
• design accessible products and services for financial inclusion and those who are vulnerable
• support our local communities and be proud of NAB’s brand and reputation.

Recognising more work is needed to drive cultural change at NAB, the Board set measurable objectives for FY21-FY25 which are outlined in the Policy. These are:

• diverse leadership teams and talent pipelines which includes:
  • at each salary level 40-60% of either gender represented
  • NAB Board (non-executive directors) 40-60% of either gender represented
  • NAB Group subsidiary boards 40-60% of either gender represented
  • inclusive workforce culture – Engagement Score top 20% (including diverse segments)
  • fair remuneration – seek to reward colleagues fairly and support NAB’s objective of gender pay equity <10% by 2025.

To support leadership accountability of the measurable objectives, key performance indicators will be put in place for all people leaders. Further, these measurable objectives will be evaluated against internal targets and appropriate external benchmarks annually and reported to the Board.

Workplace Gender Equality Agency (WGEA) gender equity indicators

We’ve complied with our reporting requirements under the Workplace Gender Equality Act 2012 (Cth) for the period from 1 April 2020 to 31 March 2021. You can find more information in the following reports:

• Questionnaire (PDF, 70KB)
• Workplace Profile (PDF, 214 KB)
• Workforce Management Statistics (PDF, 324 KB)

We’ve also met the minimum standards in relation to specified gender equality indicators, as set out in the Workplace Gender Equality (Minimum Standards) Instrument 2014.

If you need these documents in an alternative format, just email diversity.&.inclusion@nab.com.au – we’re happy to help.

Gender pay equity

Gender pay equity is a measurable objective in the Policy. WGEA analysis indicates the gender pay gap (base salary of men to women across the organisation) of the Australian based workforce at NAB is 20.1%⁴.

While slightly lower than the average pay gap for the financial and insurance services industry (22.2%), it is not where it should be.

Many factors determine a person’s pay including their skills, experience, qualifications, performance and work hours. NAB regularly reviews gender pay equity and is committed to:

• Conducting regular pay reviews across roles, and the organisation.
• Making sure annual remuneration recommendations for specific roles are gender neutral.
• Examining performance and reward outcomes on a yearly basis to identify any potential gender bias.
• Reviewing remuneration for our colleagues who return from parental leave to ensure their remuneration remains aligned.

The under-representation of women in senior management at NAB and within highly remunerated roles across the business has contributed to our gender pay gap.

Further details on NAB’s Inclusion and Diversity approach and progress, refer to NAB’s 2020 Sustainability Report (PDF, 2.3MB).

⁴ Workplace Gender Equality Agency (WGEA) 2018-2019 benchmarking report. Updated benchmarking reports by WGEA in 2021.

Our focus on having a positive social impact helps us to be the bank that our customers, people, shareholders and the community want us to be. Our work to drive positive social impact contributes to the long-term pillar of the Group's strategy.

This means we assess and balance risks and opportunities to drive long term value for our customers, people, shareholders and the communities in which we operate.

We use a range of tools and approaches including strategic giving, corporate responsibility and shared value – leveraging our core assets and expertise as a bank to address social and environmental challenges at scale.

An annual materiality assessment identifies the environmental, social and governance (ESG) themes that matter most to our stakeholders and where NAB can drive the greatest impact. This assessment process is detailed in our 2020 Sustainability Report and on our website.

Social Impact is embedded across the Group by:

• Engaging with stakeholders to identify current and emerging material issues, challenging NAB to develop mutually beneficial solutions and helping to define strategic direction.

• Implementing a SI program that sets clear objectives, establishes appropriate policies, procedures and activities and measures and reporting on progress.

• Integrating ESG management and reporting into governance structures and internal communications to ensure that SI is understood by the Board, executives and our people.

The Board has oversight of SI initiatives and ESG risks, including climate-related risk. The Board is provided with updates on SI and ESG risks, and other SI-related matters as appropriate.

Social Impact performance
Further information on the Group’s SI approach and performance is provided in the 2020 Annual Review, the 2020 Sustainability Report and Data Pack and on the Group’s website at www.nab.com.au/si. External assurance is provided over the SI data contained in the 2020 Annual Review and 2020 Sustainability Report.

You can view our relevant policies at our Resource Library.

Risk is an inherent part of NAB’s business and the effective management of risk is a fundamental enabler of our strategic plan. The strategy for managing risk is to protect customers and enable sustained performance. This is achieved through applying a Risk Management Framework, documented as part of the Risk Management Strategy, which is provided at least annually to the Australian Prudential Regulation Authority to meet our prudential requirements.

NAB applies a Three Lines of Defence operating model in relation to the management of risk. The overarching principle of the model is that risk management capability must be embedded within the business to be effective. The role of each line of defence is:

• 1st Line of Defence – Businesses own risks and obligations, and the controls and mitigation strategies that help manage them.
• 2nd Line of Defence – A functionally segregated Risk function develops risk management frameworks, defines risk boundaries, provides objective review and challenge regarding the effectiveness of risk management within the first line businesses, and executes specific risk management activities where a functional segregation of duties and/or specific risk capability is required.
• 3rd Line of Defence – An independent Internal Audit function reporting to the Board monitors the end-to-end effectiveness of risk management and compliance with the Risk Management Framework.

Our material risks are:

The Risk Management Framework is the sum of the Group’s approach to risk management. It is underpinned by consideration of the impacts of our business decisions on our customers, our community and our people. As a Group, responding effectively to those material risks with Environmental, Social and Governance (ESG) implications is important to maintaining our financial performance, reputation, long-term strategy and vision.The Group has a set of Environmental, Social and Governance (ESG) Risk Principles (PDF, 314KB), which help integrate ESG risk considerations into the Risk Management Framework.

Risk Governance

Risk governance refers to the formal structure used to support risk-based decision-making and oversight across all our operations. This consists of Board committees and management committees, delegations of authority for decision-making, management structures and related reporting.

The Board provides strategic direction for our business and represents the interests of our shareholders through the creation of sustainable value. This is achieved through a focus on customers, employees and the broader community. The Board is supported by its committees in carrying out its responsibilities (Charters are available on nab.com.au).

The Board delegates responsibility for the day-to-day management of the Group’s operations to the Group Chief Executive Officer (CEO). The Group CEO delegates authority to members of the Executive Leadership Team (consistent with their BEAR accountabilities) and to executive risk management committees.

The Group CEO oversees enterprise-wide risk management (under delegation from the Board) through the Executive Risk Committee and its supporting sub-committees. At the divisional level, the business risk management committees have been established to provide customer oriented risk review and challenge across the value chains and support the discharge of risk-related BEAR accountabilities for relevant members.

NAB recognises that it has an important role to play in the Australian political process and in the development and promotion of policy.

Since 2016, NAB has not made individual donations to any political party, Parliamentarian, elected official or candidate for political office. From time to time, NAB representatives may attend business forums hosted by major political parties. Any payments for event attendance received by political parties will be included in the Australian Electoral Commission register.

You can also view the below:

• Group Political Contributions Policy (PDF, 535KB)

The Board is responsible for the Group's remuneration policy and framework. In particular, the Board:

• approves remuneration policy and remuneration arrangements for the Group including the Group CEO and Executive Leadership Team
• evaluates the performance of the Group CEO, Executive Leadership Team and other senior executives
• approves remuneration arrangements for non-executive Directors.

The Board has established a People & Remuneration Committee (formerly the Remuneration Committee) to assist in governing remuneration across the Group. The People & Remuneration Committee support the Board in relation to NAB’s remuneration policies and practices with the objective that these:

• are reasonable, fair and in line with current governance, legal and regulatory requirements
• support the Group’s purpose, values, strategic objectives and risk appetite
• meet the needs of NAB and the expectations and requirements of shareholders, customers and regulators
• responsibly reward individuals for performance
• encourage behaviour that is ethical, delivers sound customer outcomes, supports NAB’s long-term financial soundness and aligns with prudent risk-taking.

In fulfilling this role, its principal activities include:

• considering individual executive performance in the context of Group performance and recommending to the Board each reporting period the fixed remuneration and variable reward outcomes for the Group CEO, Executive Leadership Team and certain other senior executives
• monitoring and making recommendations regarding deferred equity vesting outcomes
• oversight of NAB’s employee conduct management framework and consequence management outcomes (including impact on remuneration outcomes).

Remuneration in 2020

The Executive Leadership Team and the Board took early and decisive action on remuneration outcomes for 2020 to reflect the challenges faced by our customers, shareholders and the community. Remuneration outcomes were reduced through:

• 20% reduction in non-executive director base fees for the period 1 April 2020 to 30 September 2020.
• 20% reduction in fixed remuneration volunteered by the Group CEO for the period 1 April 2020 to 30 September 2020.
• the decision that the Group CEO and other Executives would not be awarded any Annual Variable Reward for 2020.

There were no changes to the executive remuneration framework for 2020. There were also no increases to non-executive director fees, or fixed remuneration for the Group CEO or Executive Leadership Team, other than for executives who had their accountabilities increased.

Information on the Group’s remuneration and performance frameworks and outcomes for 2020 are set out in NAB’s 2020 Remuneration Report.

• Remuneration Report in the Report of the Directors in the Annual Financial Report (PDF, 244KB)
• Financial Services Companies Peer Groups (PDF, 67KB)
• Top 50 Companies Peer Groups (PDF, 87KB)

We're committed to protecting the bank and our customers by meeting our legal and regulatory requirements in the areas of financial crime. This includes anti-money-laundering and counter-terrorism financing (AML/CTF), anti-fraud, anti-bribery and corruption, and sanctions and embargoes.

Good corporate governance is a fundamental part of our culture and business practices in the prevention of financial crime. Our corporate governance framework along with effective risk management is a key capability of a successful financial services provider in the prevention of financial crime. Find out more about our approach to the management of financial crime and how customer due diligence including know your customer verification helps us to combat our fight against criminal activity

External commitments and activities in financial crime prevention include:

• reflecting in our policies and procedures Australia’s adoption of the FATF Recommendations (International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation)
• adoption and commitment to the Wolfsberg Financial Crime Compliance Questionnaire (PDF, 247KB).
• developing AML/CTF and Sanctions Policies and Framework to comply with applicable laws and regulations, articulated in NAB's Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) and Sanctions Policy Statement (PDF, 515KB).
• maintaining and making publicly available NAB’s Patriot Act Certification (PDF, 167KB) regarding correspondent accounts for Foreign Banks. The Patriot Act Certificate is available to any financial institution that requires a Patriot Act Certificate from the NAB Group.
• communicating and making publicly available our Anti-Bribery and Corruption Policy (PDF, 873KB)
• compliance with local aid and international AML/CTF rules and regulations
• compliance with all sanctions laws and regulations in the jurisdictions in which NAB operates
• compliance with international Anti-Bribery & Corruption rules and regulations.

We are also a signatory to the UN Global Compact (UNGC) which includes a commitment to work against corruption in all its forms, including extortion and bribery. See our latest UNGC Communication on Progress.

NAB commits to act as a model litigant and has adopted a Model Litigant Policy.

We recognise our responsibility to act honestly and fairly in the conduct of litigation and make commitments on the way we will conduct ourselves in the handling of claims and litigation.

Those commitments include:

• dealing with claims promptly and not causing unnecessary delay;
• endeavouring to avoid, prevent and limit the scope of legal proceedings wherever possible;
• where it is not possible to avoid litigation, facilitating the just resolution of the litigation as quickly, inexpensively and efficiently as possible;
• not taking advantage of a claimant who lacks the resources to litigate a legitimate claim; and
• not relying on technical defences unless NAB’s interests would be prejudiced.

It is not limited to particular customer segments nor is it limited to any particular type of claim or litigation.

The Financial Claims Scheme (FCS) is an initiative by the Australian Government to provide protection and quick access to your deposits in financial institutions in the unlikely event that one fails.

How the Financial Claims Scheme works

Under the FCS, certain deposits are protected up to a limit of $250,000 for each account holder at any bank, building society, credit union or other authorised deposit-taking institution that’s incorporated in Australia and authorised by the Australian Prudential Regulation Authority (APRA).

The FCS can only come into effect if it’s activated by the Australian Government when an institution fails. Once activated, the FCS will be administered by APRA who would aim to pay the majority of customers their protected deposits within seven calendar days.

Application of the FCS limit

The FCS limit of $250,000 applies to the total of an account holder's deposits under the one banking license.

This means, all deposits held by an account holder with a single banking institution, including accounts with parts of the business operating under a different trading name, count towards the limit. For example, deposits you have with NAB, nabtrade and Ubank would count towards the $250,000 limit.

NAB businesses covered by the Scheme

The FCS applies to NAB, nabtrade and UBank.

Deposits covered by the Scheme

The FCS applies to a wide range of deposits held with NAB, including:

• savings accounts
• call accounts
• term deposits
• current accounts
• cheque accounts
• debit card accounts
• transaction accounts
• personal basic account
• cash management accounts
• farm management deposits
• pensioner deeming accounts
• mortgage offset accounts, either 100 per cent or partial offset, that are separate deposit accounts
• trustee accounts
• retirement Savings Accounts
• first home saver accounts that are deposit accounts

Further information on the FCS

If you’d like to know more about the FCS there’s information available on the FCS website.

Our core behaviours encourage our people to speak up and have open, honest conversations. Our Code of Conduct, compliance standards, and policies guide our day-to-day decisions, actions and behaviours and govern our business.

Our Group Whistleblower Protection Policy (PDF, 428KB) is applicable to all employees (including all directors, officers, employees, former employees, contractors, subcontractors and agents of the Group) and subsidiaries across our operations. The Policy complements the normal communication channels that exist for raising concerns between people leaders and employees without fear of reprisal. All employees (and former employees) have access to the independently managed KPMG FairCall Service.

The Group Whistleblower Protection Policy and Group Whistleblower Program are part of the Group Corporate Governance and Risk Framework. Overall governance of the Group Whistleblower Program is undertaken by the Board Audit Committee with day-to-day operation of the Program managed by Internal Audit.

The Group Whistleblower Committee is chaired by our Chief Audit Officer and meets bi-monthly. The Whistleblower Committee is comprised of senior leaders from across the business and is responsible for oversight of the Whistleblower Program and decisions and activities of Program officers, ensuring appropriate activities are undertaken to raise awareness of the Program across the business and ensure effective and regular reporting to Board Audit Committee in relation to the work of the Program.