Brian Hartzer made his name running ANZ’s retail banking arm in the mid 2000s. Photo: Patrick Scala

At the risk of sounding churlish on Gail Kelly’s big day, for she has been a first-rate chief executive of Westpac, some perspective is required.

The narrative which the Westpac board appears to be weaving around this big event is that this is the end of the era of excess in executive remuneration. Although Gail Kelly is Australia’s highest paid banker – taking home $12.8 million in the past financial year – Westpac chairman Lindsay Maxstead has been at pains to stress that her replacement Brian Hartzer will not be paid so much.

This rhetoric of temperance is a little overcooked. As always, the true picture is contained in the labyrinthine detail on executive remuneration in the company’s annual reports. Brian Hartzer has been at the bank since June 25, 2012. That’s two years and three months.

He appears to have enjoyed the second highest sign-on in history, at roughly $10 million. This for a non-chief executive ranks only behind Ahmed Fahour who pocketed a cool $15 million to be 2IC at National Australia Bank.

Hartzer received $5.063 million in fixed pay, $2.771 million in cash bonuses and relocation expenses of $1.854 million, including Fringe Benefits Tax. As far as we are aware, Brian’s previous address was not Buckingham Palace, Green Park, but had it been such, his relocation expenses, at $1.9 million, would still seem to be a tad on the high side.

Brian has also bought no shares in Westpac since he has been there. He has however sold many. Without knowing exact prices – he has probably made $10 million selling the shares gifted to him by the bank. Sales of 157,156 shares in 2013 at average closing prices amounts to $4.55 million. Then the next year, he sold 176,681 shares to cash out to the tune of $5.193 million (using again average closing prices).

It would be too much to expect Westpac to make special note of this, Brian Hartzer’s $20 million in a couple of years for not being chief executive that is, in its carefully crafted media blitz today. To frame the advent of Hartzer however as enshrining a new era of executive restraint is a little cheeky.

If we let them get away with this one, they might endeavour to contend that Gail Kelly was paid less than the average annual wage as she only took home $35,000 (while omitting to say that it was $35,000 a day).

Again, Kelly did a great job (and we were personally privy to quite a bit of criticism of her stewardship – some emanating from rival bankers and at times seemingly chauvinistic). Bottom line: her shareholders were treated to a substantial increase in wealth during her tenure.

It is also just as valid an argument that her pay was excessive as running a bank these days is akin to running a utility. You are backed by the taxpayer, you can’t go broke, so there is little risk. Risk is a critical element in proper executive remuneration and yet banks are a protected species.

Further, if we evaluate Hartzer’s pay by comparing it to other banks, and other sectors, he does not come cheap. Exhibit A, Andrew Mackenzie replaced Marius Kloppers as chief executive of BHP on 40 per cent less than Kloppers was being paid.

Indeed, as evinced by the round of annual general meetings this year the rate of executive pay rises has eased. The incidence of shareholders rejecting remuneration reports has also come off the boil. Boards in the contractors sector have endeavoured to bring to heel executive pay. With the exception of Goodman Group and Westfield, boards in the property sector have done the same.

Qantas, in the aftermath of the era of Geoff Dixon and Peter Gregg, has also shown commendable restraint. Alan Chief executive Joyce has only picked up some $3 million in bonuses in six years.

That brings us to the banks. Yes, the rate of increase has slowed but overall pay is hardly restrained. National Australia Bank’s new chief Andrew Thorburn is most appropriate at fixed pay of $2.3 million. Cameron Clyne, who himself was lowest paid among big bank chiefs, was on $2.7 million fixed.

The rules of thumb are that full executive remuneration packages are a multiple of fixed pay and the full package is usually 3-3.5 times the fixed pay.

With this in view, here are the others: Mike Smith at ANZ – as third biggest bank – is considered to be most luxuriantly rewarded. Smith took home $17 million a couple of years ago. His fixed pay is $3.3 million. Ian Narev, who runs the nation’s largest bank, Commonwealth (also deemed by many to be most successful from a shareholders point of view) is on $2.5 million. His predecessor Sir Ralph Norris was paid $3.1 million fixed.

Brian Hartzer starts on $2.65 million – more than Narev and Thorburn – roughly what Gail Kelly started on.

The most significant change since Gail Kelly took the helm in 2008 is that banks are now explicitly backed by the government. The GFC saw to that. Kelly had been chief of St George bank and did quite nicely when, as chief executive of Westpac, she launched a successful $19 billion takeover for the Dragon. She still had live share options in St George.

St George, as the financial crisis deepened, was in a spot of bother too. Like some of its peers globally it had been expanding its loan book aggressively and its access to wholesale funding (the money it raised on bond markets to meet its lending commitments) was freezing up.

Along came the takeover – some might contend a necessary and lifesaving deal – and St George could suddenly rely upon Westpac’s superior credit rating and balance sheet. Then came the federal government to the rescue with its sovereign guarantees for deposits and wholesale funding, and special protection against short-sellers to boot.

All up a good result for the stability of Australia’s banking system and for shareholders and bank executives. Now however the banks are too powerful. Many smaller lenders have vanished and pricing is now oligopolistic. So perhaps not too good for consumers. It is this concentration of power and consequent “moral hazard”with which the government now has to contend.