Australian shares settled lower on Tuesday, posting their fourth session of falls in five, with Commonwealth Bank hit by its breaches of anti money-laundering laws, while industrial and material stocks slipped on disappointing earnings.
The decision, made by the CBA board in a meeting yesterday, was reached following consideration of the collective accountability of senior management for the overall reputation of the group.
Mr Narev previous year received a fixed salary of $2.65 million, with a total remuneration of $12.3 million, while six other senior executives took home a fixed salary of more than $1 million.
Fees for CBA's non-executive directors are also to be cut by 20 per cent in the 2017/18 financial year in recognition of the board's shared accountability.
However, it appears that Mr Narev will keep his top job at the bank, with the bank's chairman Catherine Livingston saying, "Mr Narev retains the full confidence of the board".
Full details of the remuneration outcomes and the board's full consideration will be disclosed next week in the Annual Report.
This news comes after Austrac last week alleged that criminals were using CBA ATM's to launder millions of dollars, and alleged that CBA was failing to report and monitor suspicious transactions.
The fault was fixed within a month of it being discovered in 2015. The "at risk" components are based on performance against key financial and non-financial measures.
"Reputational damage is meaningful and could reduce customer activity across a broad range of products and services".
It follows an announcement the bank would cut short term bonuses as a result of the allegations.
Lending margins could benefit from increased interest rates for investor and interest-only mortgages following March's sector-wide intervention by the Australian Prudential Regulatory Authority.
Last year CBA shareholders, angered by a recent slate of scandals including charging customers for advice they had never received, voted down the board's executive pay report, slapping the bank with a "first strike" against its remuneration report.