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Former WestpacCEOBrian Hartzer takes $2.8m hit asexecutivescount Austrac costLong-termincentives also lapsed, making it five years since the troubled banks topexecutiveshave been paid an LTI.Westpacs annual report, released on Monday, confirmed that Mr Hartzer only received his contractual entitlements after he was ousted a year ago in response to Austracs statement of claim.His 2020 entitlements included $3m in fixedpay, offset by $2.8 in lapsed share rights and $21.5m in lapsedCEOperformance share rights.While someexecutivesreceived ashort-termincentive in 2019, there was a clean slate last year on the recommendation of chiefexecutivePeter King, reflecting the banks $1.3bn penalty for more than 23m transgressions of anti-money laundering legislation.Remunerationcommittee chairman Craig Dunn said the chiefexecutiveand board felt it was fundamental that collective accountability for the financial crime outcomes in Westpacs businesses, which had led to Austracs action, be recognised.Mr Dunn said the board had cut $20.1m from grouppay, including cancellation of theshort-termincentive for senior management personnel.Remunerationconsequences were applied to 38 individuals, reflecting the level of direct management responsibility or accountability and the level of culpability for the compliance failures, Mr Dunn said.In addition, as the issues took place over many years, a number of relevant individuals had since left Westpacs employment.For most of these former employees, aremunerationadjustment was not possible as they did not have unvested deferred variable reward on foot.In other outcomes, Mr Dunn said Mr Kings totalremunerationtarget was 10.7 per cent lower than for Mr Hartzer, whose targetedremunerationwas lowered by 23 per cent in October 2019.Mr Kings totalpaylast year was $3.6m, including $2.3m in fixedpay.The variable reward pool for the bank was slashed by $139m, on top of a significant reduction in 2019.Theshort-termincentive was also cut for general managers in 2020.Westpac suffered a second consecutive strike on itsremunerationreport in 2019, and will be hoping that the consequences doled out to itsexecutivesin 2020 will avoid a third consecutive strike.Mr Dunn said Westpac had reviewed the banksexecutivepaystructure and would implement the agreed changes in 2022.In addition to complying with the standard proposed by the Australian Prudential Regulation Authority, the key objective was to place greater emphasis on rewardinglong-term, rather thanshort-term, performance. Swinburne University of Technology Page 2of 5ACC30008School of Business, Law and Entrepreneurship Accounting TheoryThe need to focus on thelongertermoutcomes was highlighted in the royal commission and aligns with feedback from shareholders and regulators, Mr Dunn said.It is also important that the new structure assists in attracting and retainingexecutivetalent to deliver on Westpacs strategy in an intensely competitive international market.Westpac will consult with shareholders on the review next year.Extract from Gluyas, R. Former WestpacCEOBrian Hartzer takes $2.8m hit asexecutivescount Austrac cost. The Australian (Online). November 2, 2020.

required.

Explain Mr Hartzersremunerationcontract using Agency theory.(Maximum words 350)(7 Marks)

II.Discussthe shareholdersstrikeson the remuneration reportusing an appropriate theory.(Maximum words 250)

(5 Marks)III.Apart from the above theories, what other theories from ACC30008 can be applied to the discussion, including the pay cut reported in the article. (Maximum words 400).