12 questions lodged at 2022 Data3 AGM
October 28, 2022
Here is the text of the 12 written questions lodged at the 2022 Data3 hybrid AGM held on October 27, plus a brief summary of the answers. Only the last 2 weren't asked.
Did any of the 5 main proxy advisers - ACSI, Ownership Matters, Glass Lewis, ISS and ASA - recommend a vote against any of today's resolutions? Which of the proxy advisers are covering us & have their been any material proxy protest vote? Will you disclose the proxy votes before the debate on today's resolutions so shareholders can ask questions about the reasons if there have been any protest votes? And why not disclose them to the ASX with the formal addresses like many companies now do?
Answer: Chair wasn't aware so CFO was given the floor and he flagged protest votes on the new constitution and the CEO's LTI grant. Watch video via Twitter.
A question for auditor Dan Colwell: Data3 now has a market capitalisation of $1 billion, but the audited accounts claim we only have net assets of $62 million. Could the auditor please explain why the market things the company is 16 times more valuable than the directors and the auditor. Also how many other $1 billion+ ASX listed companies is Pitcher Partners auditing and when was the audit last put out to tender?
Answer: Auditor did well on the phone, explaining the accounting standards and also pointing to the Pitchers website for a list of its other listed clients. Said there had been no audit tender since the 1997 float.
It is very unusual to have a fast growing tech industry company that doesn't have a substantial shareholder with a stake above 5%. No founder remains and no institution has chosen to build up a concentrated exposure. Are we aware whether the 3 big index global index funds, Blackrock, State Street and Vanguard, are on our register and when engaging with shareholders, who do you talk to given that no individual shareholders is substantial. Do you meet with institutions that own more than 1%?
Answer: CEO said they speak to about 40 institutions a year but not usually the big index funds which are too busy.
When disclosing the outcome of voting on all resolutions today, including the remuneration report, could you please advise the ASX how many of our 6,000 shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus last year and by Tabcorp after its AGM in Brisbane yesterday.
Answer: CFO said they would look into this for next year.
Laurence is clearly the biggest contributor to the great success of Data3 over the years and I'm surprised he doesn't have a bigger shareholding. Could Lawrence detail if he has ever sold any of his Data3 shares and also summarise what proportion of his previous LTI grants have fully vested? Does Lawrence believe he has enough petrol in the tank to keep going in this taxing role for at least another 3 years and how important are these LTI grants to keep him motivated?
Answer: the CEO said he sold some stock 3 years earlier and chair said this was for understandable family reasons. CEO also said all previous LTI grants had fully vested and this would help keep him motivated but most important driver was working with a great team.
The proposed 50% increase in the fee cap to $900,000 is perfectly reasonable given the outstanding performance of the company in recent years. What is the actual plan in terms of increasing director fees once this authorisation kicks in at the beginning of 2023? Don't be ashamed about giving yourselves a material increase.
Answer: this question was welcome as there'd been some earlier criticism from the floor.
Given the interesting discussions across a range of topics today, including on these constitutional amendments, could the chair undertake to make an archived copy of the webcast plus a full transcript of proceedings available on the company's website? Well done on previously publishing the AGM webcast but the likes of Nine, AGL, ASX, ANZ, CIMIC, Domino's, G8 Education and Lend Lease all produced their 1st AGM transcripts in 2021. Will you follow suit today?
Answer: no commitment but maybe.
What was the process through which we recruited Susan Forrester to the board. Was a recruitment firm involved and did the full board interview multiple candidates? Could Susan clarify if she knew any of the Data3 directors before engaging with the recruitment process?
Answer: the nominations committee chair gave a long explanation. Head hunter was involved and process sounded fine as multiple candidates were assessed.
Congratulations to Mark Esler for his long term contribution to our success and for his retention of one of biggest shareholdings in the company which is now valued by the market at $18.5 million. Mark doesn't need to work again so what are his plans in terms of serving out a full term and retaining the size of his shareholding? Also, it seems our entire board is Queensland-based. Does Mark think we need to introduce some geographic diversity to the board?
Answer: Company secretary edited this question back. ASA also raised some independence questions but he was out of the company for 8 years before rejoining the board so no problems there. He plans to keep his shareholding and serve a full term. Parochial Queensland focus on board not really addressed.
Surely you saw that a number of constitutional amendments were voted down last year because shareholders and proxy advisers don't want fully virtual AGMs. How did you not get that message to the extent that you've joined the growing club of ASX listed company which put up a constitutional amendment package that was voted down. Who were the legal advisers which recommended this proposal and will be they paid in full for their poor advice?
Answer: chair said they took advice and the legal fees had probably already been paid.
Just a final general question. How much do the likes of Microsoft and Cisco sell direct in Australia. Is everything routed through 3rd party vendors like Data3 or do they sell some of the products direct? Is it a risk that they could take more products in house, particularly as our profits continue to rise.
Answer: not asked.
Why did the chair need to read out that long LTI explanation. Couldn't he just say: "I move the resolution as duly set out in the notice of meeting and distributed to all shareholders be adopted?"
Answer: not asked.
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