Reuters Westpac Chief Executive Officer Gail Kelly
With the shareholder approval, Ms Kelly is the second-highest-paid chief executive in Australia after ANZ Chief Executive Mike Smith who got a $9.7 million compensation package.
Their pay packets are higher than those of BHP Chief Executive Marius Kloppers and Rio Tinto Chief Executive Tom Albanese.
One shareholder, however, found Ms Kelly's salary too much, prompting Westpac Chairman Lindsay Maxsted to defend the packet as fair and at about the same level as its competitors in the same industry.
"I'm the first to acknowledge that it is a lot of money, we don't shy away from that at all. But we work very hard to see that it is market drive, we work very hard to ensure it rewards performance. The fact is they are big numbers, but Westpac is a very big and complex business," Mr Maxsted said in a statement.
If Ms Kelly's paycheck would become fatter, she, in turn, is in favour of cutting interest rates in 2013 to address business and consumer subdued confidence. She foresees the rate cuts coming in February or March.
Last week, the Reserve Bank of Australia reduced the overnight cash rate by 25 basis points which brought it down to 3 per cent. Two days after the RBA decision, Westpac, National Australia Bank and the Commonwealth Bank of Australia announced they would pocket 5 basis points and pass on to borrowers the 20 basis points.
ANZ is scheduled to announce its decision on Friday, Dec 14, although it is expected to follow the three banks' move.
Despite their similar decisions, Ms Kelly denied there is collusion among the big four.
"Each bank is very clearly making its own decision. If you look at any period of announcements very often there are differences. This particular one happened to have major banks coming in with a similar number or the same number, but that's just circumstance," Ms Kelly said.
As early as mid-2012, Westpac has been supporting interest rate cuts.