ANZ (ASX:ANZ) Sued by Former CEO Over $13.5m Bonus Cuts: Is 4.7% Yield Worth the Risk?

ANZ Group Holdings (ASX: ANZ) finds itself in an unusual position today. Former CEO Shayne Elliott has launched legal action against the bank, claiming it breached his departure agreement by stripping A$13.5 million in bonuses. Yet shares are trading around A$35.70, up roughly 1% on the day and near 52-week highs.
For investors, this creates a fascinating paradox: ANZ has delivered returns of approximately 24% year-to-date despite record regulatory penalties, mass job cuts, and now a lawsuit from its former boss. The question is whether the market is correctly shrugging off the governance drama or if these warning signs deserve more attention.

What are the Best ASX Bank stocks to invest in right now?

Check our buy/sell tips

Why ANZ Stripped Executive Bonuses and What It Signals

The bonus cuts trace back to ANZ’s A$240 million ASIC settlement, the largest penalty ever handed to a single company by the regulator.
The failures were serious:

• Incorrectly reporting bond trading data to the government
• Charging fees to customers who had died
• Mishandling hardship requests from thousands of struggling Australians

In response, ANZ’s board clawed back roughly A$33 million in bonuses from executives. Elliott, who led the bank from January 2016 until May 2025, lost A$13.5 million. He argues the bank breached a “clear, unambiguous” departure agreement and has filed proceedings in the NSW Supreme Court.

Here’s what concerns us. Elliott still holds about A$7.9 million in long-term incentives. Proxy advisors ISS and CGI Glass Lewis believe this is too generous. Both recommend shareholders vote against ANZ’s pay report at the December 18 AGM. Since ANZ already received a “first strike” last year, a second strike would trigger a board spill vote. We believe this is unlikely, but it adds uncertainty heading into 2026.

The Bull Case- Why ANZ Shares Keep Climbing

Despite the headlines, ANZ’s share price tells a different story. The stock has outperformed Commonwealth Bank (ASX: CBA), Westpac (ASX: WBC), and NAB (ASX: NAB) throughout 2025, driven by solid fundamentals and turnaround momentum.

ANZ’s CET1 capital ratio is around 12%, which means it has a strong safety buffer. The bank also kept its dividend at A$1.66 per share, with 70% franking. At today’s share price, this gives investors a 4.7% dividend yield, even before adding franking credits, a good return for income investors.

The new CEO, Nuno Matos, has started making big changes. He plans to cut 3,500 jobs and remove 1,000 contractor roles, aiming to save A$800 million in costs. The takeover of Suncorp Bank is moving ahead, and Matos has set bold goals: a 12% return on tangible equity by 2028 and 13% by 2030.
For investors who rely on dividends, the outlook is steady. The next dividend payment of 83 cents per share will be paid on December 19.

The Investor’s Verdict

ANZ shares are trading at about 13-14 times earnings, with most analysts expecting the price to hover near A$35, which means there isn’t much room for big gains. The stock isn’t cheap, but it’s not overpriced either, and it offers a dividend yield close to 5%, which is appealing for income-focused investors.

The main risks include a lawsuit that looks more like a distraction than a serious problem. The upcoming December 18 AGM could bring governance pressure. And APRA has imposed an extra A$1 billion capital buffer until ANZ fixes its risk culture.

• Income investors- The 4.7% yield looks reasonable if you can tolerate governance noise. The dividend appears secure.
• Growth investors- The turnaround has potential, but we believe most easy gains are already priced in after the strong 2025 run.
• Conservative investors-  Consider waiting until after the AGM for clarity on board stability.

The bottom line: We rate ANZ a “hold” for shareholders collecting dividends and a cautious “accumulate” for income seekers comfortable with short-term volatility. Next week’s AGM will set the tone for 2026.