Gail Kelly took home almost $13 million during her last full year as Westpac boss, but her successor won't do quite as well as the bank looks to rein in executive pay.
Westpac chairman Lindsay Maxsted said the bank was using Ms Kelly's retirement to "reset" the way it pays its top staff.
He said things had changed since Ms Kelly was appointed in 2008 and acknowledged most people would agree salaries in the banking sector were too high in the lead up to the global financial crisis.
"It has moved so much since Gail was appointed," he said.
"I think there is an understanding in both the investor community and the public generally that the levels of salaries within the financial services sector did get out of kilter through that era."
Ms Kelly's successor Brian Hartzer will receive a fixed salary of just under $2.7 million, which is $300,000 less than Ms Kelly's package, although his take home pay could more than double through short-term incentives.
He will also have to wait longer to receive some of his bonuses, with Westpac deciding earlier this year that share-based long-term incentive payments would now vest over four years, rather than three years in Ms Kelly's case.
Mr Maxsted acknowledged Ms Kelly's $12.7 renumeration package was "a big number", but said it was boosted by the vesting of long-term incentives for the previous three years.
And he said the value of those incentives, which had been set with a share price of $22 in mind, had been lifted by the rise in the bank's share price over the past few years.
"Absolutely and unashamedly Gail is a beneficiary of that share price going from $22 to $33, but so is everyone else that owns a Westpac share," he said.
"And that's why it (Ms Kelly's totally pay) comes out the way it does."
