Bad PR is now so common in the banking industry that no one even flinched when Commonwealth Bank got another dose of it this week. But the CBA board's actions over executive bonuses, approved by shareholders at this week's AGM, have set the banking industry up for years of being laughed at whenever it raises the issue. The facts of the issue are straightforward. CBA executives were promised bonuses if they met certain targets, including finishing amongst the top three banks for customer satisfaction. CBA finished fourth, but the board decided the executives should have the bonuses anyway. For anyone who takes executive remuneration issues seriously, Turner's dog-ate-my-homework explanation at the AGM was strikingly, painfully awful: "This year, in the year to June 2011, there was an anomaly and it started last November. On Melbourne Cup Day last year, the executive team implemented an out-of-cycle interest rate rise... And the increase was essential; it was essential to recover increased costs of wholesale funding that had already occurred. "The executive team knew perfectly well that this would have a bad impact on customer satisfaction but they were convinced that it was in the best interests of shareholders." He added that had the CBA skipped the bonus payments … "... Ridiculously, it might also have confirmed people's worst fears that we were more concerned about customer satisfaction than about the good results of the group." At which point, a few in the crowd might have wondered: if the CBA chairman is willing to publicly describe as "ridiculous" the idea of putting CBA customers' satisfaction above short-term results, should he speak publicly for the bank at all? A few in the audience might have had other questions. Such as: If the CBA board and its remuneration committee hadn't thought about scenarios like this, is it time to look for better board members? If the bank's executive team couldn't anticipate the occurrence of "anomalies", are they really as smart as the board reckons they are? If the fourth-place customer satisfaction ranking could be tossed aside, why did the board make it a target in the first place? If pursuing shareholders' interests trumps everything else, why not just adjust people's pay packets based on their performance? How seriously will the executive team themselves take future bonus targets, now they know that "it was in the best interests of shareholders" is an acceptable excuse for missing them? When executives miss targets and get their shares anyway, what does that do to staff morale outside the executive team? If it's vital to pay the bonuses to keep the executive team happy, isn't the CBA back paying the market price for its talent - in which case, why not just pay the market price to begin with? None of this mattered at the CBA meeting; just 13 per cent of the votes were cast against the remuneration report.