1. Proxy advisers and proxy disclosure
There are 5 proxy advisers in the Australian market – Ownership Matters, ISS, CGI Glass Lewis, ACSI and the ASA. We know ASA is recommending & voting against the rem report, the CEO's LTI grant & the re-election of Peter Marriott. Have any of the other proxy advisers gone against the board's voting recommendations today and if so, please provide the details? Have there been any material proxy votes against any of the items of business and will these be disclosed before the debate on each item?
Chair: No one else is against. We'll give you the proxies at the end.
2. Retail shareholder dilution from lifting placement cap
Calendar 2020 produced a deluge of heavily discounted selective placements to unknown institutions which badly diluted retail shareholders. This was facilitated by ASX lifting the placement cap from 15% to 25% as a COVID measure. It proved to be a disaster for retail shareholders. What role did the board play in this decision and do you now acknowledge this move was a mistake that hurt retail shareholders by diluting us out of billions of dollars in value, without compensation?
Chair: We saved Australia, blamed others like ASIC and "stakeholders".
3. Chair succession
Could chair Damian Roche please explain the process by which he was selected to succeed Rick Holliday-Smith as chair? Was there external facilitation, candidate presentations or a ballot and could the chair address the criticism that, like him, too many ASX directors come from the transaction industry as opposed to having an investor perspective. When will ASX appoint their first ever director who has a clear affinity with the interests and perspectives of retail shareholders?
Chair: Board secrets stay secret. Waffle about looking retail shareholders.
4. Changes by new chair
Damian Roche was an ASX director under Rick Holliday-Smith for the past 7 years. What changes has he made since the handover in April? For instance, will he be paid the same $571,000 base chairman fee that Rick has received since 2017? Can he also disclose his age and more about his board experience. Has he done the AICD governance course or thought about joining other directors at O'Connell Street Associates? Where is his main office now and before April's succession?
Chair: He turned 50 two weeks ago and has his office on level 1 of ASX. Invited me for a meeting there.
5. Chair's profile and connections
What is the new chair doing to lift his profile? How many shareholders has he met as chair? Does he plan to join any other ASX100 boards like all previous ASX chairs? Why hasn't Damian done any media interviews since becoming chair and does he have any relevant political or regulatory connections that could be helpful for ASX? Has the chair ever been a member of a political party and what is his view about ASX continuing to make 6 figure political donations every year?
Chair: I've met shareholders, sat in on regulatory stuff, am not a political party member, might do media one day and we'll keep talking about those donations which deliver us access.
6. CEO share sales
The CEO last week sold 10,988 ASX shares for $944,968 but retains 69,412 fully paid shares worth $5.65m. Why is the CEO selling shares, particular given The AFR's Joe Aston recently claimed that he was paid “at least $49 million” during his 3 and half years as CEO of Challenger. Is that true?
Chair: Not talking about Challenger, he's done the same sales the last 3 years.
7. Jobkeeper and Jasmine Allen
The approach of public company directors to the widely rorted $90 billion JobKeeper scheme has been under intense scrutiny with some companies choosing to pay JobKeeper receipts back to the ATO. Could we hear from the chair on how ASX played JobKeeper and also from Yasmine Allen on why she and her fellow Cochlear directors first claimed $33 million in JobKeeper and then chose to repay $23 million?
Chair: Protected Jasmine and said ASX didn't claim JobKeeper. Said to raise the Cochlear question at the Cochlear AGM.
8. Stephen Mayne Q8 – AI and JobKeeper
Heather Ridout spent many years as CEO of the Australian Industry Group, which received $4m of JobKeeper in 2020 despite revenue only falling 6%. AI Group is also publicly arguing for secrecy about JobKeeper recipients when NZ, the UK and the US publish this data. The ASX website claims our company is “leading by example with good governance”. Does Heather agree that it was wrong of AI to both claim JobKeeper & then advocate for secrecy? As an ASX director, does she agree there should be a NZ-style register of recipients?
Chair: protected Ridout from the question and said she'd left AI many years ago.
9. Constitutional reform
The ASX constitution requires a range of 7-15 directors & we currently have 9. This minimum of 7 is larger than most companies & reduces flexibility for ASX in managing board succession. Will the board put up a constitutional amendment next year to lower the minimum number of director to 3, just like AFIC, AGL, Alumina, Ansell, APA, Argo, Aristocrat & Aurizon - and that is just the companies starting with A. And if doing a constitutional amendment, would you also consider introducing a 12 year tenure limit for directors?
Chair: Happy with constitution, so no changes.
10. Peter Marriott re-election
Having already served more than 12yrs on the ASX board, why is Peter Marriott running again? Many other boards don't allow this sort of extended service. Could the new chair outline what tenure limits currently apply to ASX directors & whether he supports changing this? As chairman of the audit & risk committee, can Peter please outline what oversight he had in managing the risks that were taken ahead of last year's whole day outage, which has jeopardised our monopoly licence?
Chair: we've already covered that. Check against transcript as Marriott may have commented.
11. Chair tenure
It has taken ASX too long time to move on from its pre-demutualisation chairs. Maurice Newman chaired ASX when it demutualised in 1998 & didn't retire until 20yrs later in 2008, when he was 70. Rick was chair of SFE when it demutualised in 2000, steered it through the 2006 merger with ASX & then only retired in April this year when he was 71, 21 years after SFE floated. Can the new chair promise that he won't do 20 years as well? Given this history of excessive chair service, why not put tenure limits into the constitution?
Chair: I won't be doing 20 years. No plans to change constitution.
Atlassian is a Sydney-based tech company which has been NASDAQ listed since 2017 and now has a market cap of more than $US100 billion. Summarise what steps ASX has taken to get Atlassian to at least take out a secondary listing on the ASX? Have we been too inflexible on price. Why do the chair and CEO think Atlassian has kept rejecting ASX?"
Chair: Can't talk about specific companies but note they have a dual class voting structure which we don't allow.
13. Outage accountability
Why did Rick retire in April rather than seeing out his full term & saying farewell today? There was no inkling at last year's AGM that it was his final meeting after 20 years on the SFE & ASX boards. Did Rick jump early or was he pushed after the problems with CHESS & the trading outage last November? If not Rick, who has been held accountable for the outage given that risk committee chair Peter Marriott is running again today? Is the recent departure of deputy CEO Peter Hiom on July 1 an example of executive accountability?
14 - CEO bonus and share sales
Does the CEO think it was reasonable to have his target bonus cut by 20% in 2020-21, in light of last November's outage. And could he please comment on his recent shares sales. Is it his intention to continue the 3 year trend of shares sales mentioned earlier in the meeting by the chair and was The AFR correct in its recent reporting about the size of his pay packet at Challenger?
Chair: waffle and protected CEO from answering.
15. Shareholder turnout on rem and other matters
Do you know how many ASX shareholders voted on the remuneration report today and how many are engaging with today's online meeting? When disclosing the outcome of all resolutions on your website, could you please advise how many shareholders voted for and against, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholders sentiment on all resolutions and was a new best practice disclosure initiative recently adopted by Metcash after its AGM.
Chair: Yeah, nah.
16. Annual election of directors
Treasury Wine Estates has voluntarily moved to annual elections for directors in line with best practice that occurs in both the US and the UK. Dual listed companies like News Corp, BHP and Rio Tinto all do this due to the laws in the US and UK. What does Heather think about this idea and could the chair comment on whether ASX will consider following suit to lead by an example on governance by being more regularly accountable to shareholders.
Chair: protected Heather, rejected suggestion.
17. Opinion-based shareholder resolutions
As our longest serving director, could Peter Marriott comment on why Australian boards so afraid of listening to the opinions of shareholders by way of non-binding shareholder resolutions? These are standard practice in the US yet dozens of ASX listed companies have now recommended against these amendments. Would ASX consider blazing the trail on this issue by amending its constitution to allow for opinion-based shareholder resolutions? If not, why not be a best practice leader on shareholder engagement and empowerment?
Chair: yeah, nah.
18. Early disclosure of proxies
Could the proxy votes please be displayed before the remuneration report debate so that shareholders have an opportunity to ask questions about the figures. This is ASA best practice. Also, why did ASX refuse a polite request to lodge the proxy votes with the ASX along with the formal addresses before the AGM started, just like Afterpay and Ausnet did at their previous AGMs? Please get with the disclosure program, Mr New Chair.
Chair: Yeah, nah.
19. Heather Ridout conflict
Does Heather know if Australian Super has voted its 5% stake in favour of her re-election today or have they abstained due to a conflict of interest?
Chair: protected Heather and went to general counsel who had to ask for the question to be read out again and then said Heather wouldn't know how Australian Super voted. Couldn't the lady be allowed to speak for herself?
20. Succession management
Succession management should be a key KPI for long term CEOs. After the departure of deputy CEO Peter Hiom on July 1, could the CEO and chair both comment on whether they believe there are multiple potential CEO successors currently on the payroll at ASX?
Chair: protected CEO and once again, effectively declined to answer the question apart from waffling about the board closely monitoring succession issues.
21. Request for transcript
We have covered a lot of territory at today's AGM and thank you for reading out all submitted questions without any censorship. In the interests of full transparency, could you confirm that ASX has indeed agreed to follow the lead of companies like Crown Resorts, Transurban, Woolworths and AGL by publishing a full transcript of today's AGM on your website, along with a full video of the webcast. Could the transcript include a comment by the CEO on why he needs to keep accepting LTI grants after 5 years as CEO?
Chair: yes, we'll produce a transcript, the only concession for the day.
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