16 questions asked at 2022 Aristocrat Leisure AGM

January 18, 2023

Here is the text of 16 questions lodged at the Aristocrat Leisure AGM held on February 24, 2022. Aristocrat is still refusing to publish an archive of the 90 minute AGM webcast, which contributed to a decision to run for the board at the 2023 AGM. An extract from ASA's 2022 AGM report is included below as it has some details on the answers.

1. What did the proxy advisers recommend?

Did any of the 5 main proxy advisers in the Australian market - ACSI, ASA, Ownership Matters, Glass Lewis and ISS - recommend a vote against any of today's resolutions? Which of the proxy advisers are covering us and has their been a material proxy protest vote against any of today's resolutions? Will you disclose the proxy votes before the debate on today's resolutions so shareholders can ask questions if there have been any protest votes?

2. Why not pay back our $16m in JobKeeper?

Why were we one of the 474 ASX listed companies which registered for the widely rorted JobKeeper scheme where $38 billion of the $88 billion was paid to employers which didn't satisfy the required revenue drops to qualify. Did our revenue really drop by more than 50% to qualify for the $16 million in Jobkeeper we claimed for 840 staff in 2020. Given out market captalisation is $25.6 billion, why don't we just repay this $16 million in order to uphold our ESG credentials? Could Chair Chatfield also comment on why his other companies, Costa and Transurban, did not claim any Jobkeeper. Was it a board decision to apply or not apply at all 3 of those companies?

3. Well done to chair Chatfield for his PAITREO record

Congratulations to the chair Neil Chatfield for continuing his magnificent record of only doing PAITREO capital raisings, which is the fairest way to raise capital. He has now been involved in 7 of the 39 PAITREOS on the Australian market since they became a thing in 2010 – 2 at Costa, one at Aristocrat and 4 at Transurban. Could he comment on how the Aristocrat board and its advisers settled on a PAITREO with the recent $1.3 billion raising. Did he personally insist on it, even though it involves a lot more work for the under-writers and executives when compared with the old fashioned placement-SPP capital raising?

4. Ainsworth family shareholding

How much of the company do members of the Ainsworth family still control after the recent $1.3 billion raising and were they able to choose whether to go in through the institutional or retail offer? Are they collectively the largest shareholder and how do we deal with them from an investor relations point of view. What sort of vehicle are we currently supplying Len Ainsworth with and does the 98 year old still drive? Once Len Ainsworth dies, are we concerned there could be a flood of share sales given that his 7 sons are legally forbidden from selling any of their shares whilst he lives and he even once sued one of them who did sell some shares? Have we ever considered granting the Ainsworths a board seat now that Len is no longer a competitor and they are collectively our largest shareholder?

5. Australian pokies market share

The chairman disclosed at the 2020 AGM that our Australian poker machine market share was around 50%. Could the CEO comment on whether we have increased our share of the 200,000 machine Australian market since then. Is it correct that we currently have almost 100,000 of our machines spread about Australia's 5000 pokies venues? Who is and how much does the second biggest player in the Australian market have? In percentage terms, do we have a market share above 50% in any of the 3 main categories: clubs, pubs and casinos? Which of those 3 categories is our weakest market share segment and which is our best?

6. Arlene Tansey re-election

Seeing as we don't have a deputy chair, who is the second most senior director on this board, based on committee positions, experience and influence. For instance, who leads the annual performance review of the chair and do we even conduct such a performance review? Could Arlene Tansey comment on whether she would personally support formally discussing the possibility of electing a deputy chair, preferably as part of your chair succession planning process. Would she be interested in the position?

7. Is the chair running again when his term expires?

The chair Neil Chatfield will be almost 70 when his 3 year term expires at the 2024 AGM. Is it his current intention to seek a further 3 year term at that AGM and could he please outline what he is doing about succession management for the chair role. Does Arlene believe the next chair is currently on the board and, if not, will she and the chair undertake to recruit potential chairs as part of the proposed expansion of the board once the fee cap is lifted from $3.2 million to $4 million.

8. Is Anthony Ball fit for the job at Aristocrat

Anthony Ball was the controversial long-term CEO of Clubs NSW who authorised tens of millions of dollars worth of political donations and political campaign spending during his nearly 10 years at the top of that organisation. Aristocrat has a commendable global policy of not making any political donations yet Mr Ball has been heading up our Australian government and industry relations operation since June last year. Has he been a worthwhile recruit in and are we comfortable with how he goes about it given the reputation of Clubs NSW as a ruthless and aggressive organisation that will pressure and intimidate regulators and politicians to ensure that Australians remain the world's biggest gamblers in per capital terms, mainly due to the $14 billion a year lost on Australia's 200,000 poker machines, half of which are ours.

9. Better disclosure of voting data

When disclosing the outcome of all resolutions today, will the chair support the idea of publicly disclosing how many of our 44,000 retail 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 Metcash, Dexus and Altium after their AGMs last year. Rather than the vote being dominated by institutions and the Ainsworth family, please embrace this secondary form of voting disclosure as well.

10. Request for AGM transcript

Given the interesting discussions across a range of topics today, could the chair undertake to make an archived copy of the webcast plus a full transcript available on the company's website. Nine Entertainment chair Peter Costello, who appreciates the benefit of a parliamentary Hansard transcript where MPs don't have to scroll through old videos to find out what was said, made this change last year & had a full transcript of Nine's AGM online before the end of the day. Can we match that time?

11. Annual elections 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. BHP has promised to retain the practice after collapsing its DLC back to a single primary ASX listing. Can we please look at doing the same in 2023, particularly given our board is so small and we are a global operation with growing interests in the UK and US, two markets which both mandate annual director elections.

12. Quality of PwC audit work

The AFR reported last year that Australia's biggest auditor PwC has used dozens of unqualified workers, on lower salaries and with less training and resources than their main office counterpart, to complete audit work for large listed clients from an unbranded office in western Sydney's Parramatta. Could our PwC auditor, Mark Dow, please comment on whether this is true and whether any Aristocrat auditing has been done from this unbranded Parramatta office. Could the Aristocrat audit committee Arlene Tansey please comment on this issue.

13. Sylvia Summers Couder re-election

Could Sylvia please comment on why we didn't conduct a share market raid to secure a cornerstone shareholding in Playtech before entering into negotiations with the board to secure an agreed takeover? Also, was Sylvia comfortable with Playtech's illegal gambling and money laundering operations in so called grey markets. Was she aware that there was an assassination attempt against Playtech's billionaire founder Teddy Sagi in Cyprus last October. Was this really a business that Aristocrat should be involved with? Could the chair and CEO also please comment on the more colourful aspects of Playtech's global online gambling business.

14. CEO LTI grant resolution

Our current market capitalisation is $26.5 billion yet our audited accounts claim that we only have net assets or equity of $3.87 billion. How can our market value be 6.85 times greater than our balance sheet value? Can Trevor or the chair name any other ASX100 company which has a more inaccurate conservative balance sheet and could both the auditor and the CFO comment on which aspects of the value in our business are not captured in the balance sheet? Does out balance sheet net asset position have any impact on the metrics in this LTI grant?

15. Employee Equity Scheme

Well done for going with this staff equity scheme. In terms of retaining staff, have we been hit hard by the great resignation and are we going to need to lift our wages to retain and attract staff. What percentage of our workers are unionised and do we have a certified enterprise agreement covering any of our Australian manufacturing operations? How many of our staff or contractors have refused to get vaccinated so far and how are we handling this?

16. CEO LTI grant

The CEO already owns $20 million worth of ordinary stock, before considering any future potential incentives vesting. Could he comment on whether he really needs any more incentive. Also, now that he has retired as Transurban chair, could Neil Chatfield outline how many days a week he is spending on Aristocrat business and whether he intends to take on any new roles now that his dance card only includes Aristocrat and the chair role at Costa? Neil is one of the smartest and most effective chairs in the Australian market so it would not surprise if he is continuing to field lots of offers to join other boards. Is he saying no to all offers given his age and in order to focus on Aristocrat and Costa? One other board seat would be okay because I don't want him to have too much time on his hands such that he is getting in the way of our well regarded and highly incentivised CEO.

ASA summary of the questions

Below is the text from the 2022 ASA AGM report on the Aristocrat meeting by company monitor and ASA director Carol Limmer which summarises the responses to some of these questions.

"Other than ASA, questions/comments raised at AGM were by Mr Stephen Mayne who made some good observations. Among his queries were whether Chair would be standing down in 2024 and Board succession planning (Chair said that Board expansion and succession planning was continuing discussion), No Deputy Chair and who is 2nd most influential individual (Chair said did not need Deputy and all Directors were very capable), whether Board Performance Reviews were conducted (yes, annually), whether ALL might adopt annual re-election of all Directors (will continue to consider in light of Australian good practice), asked for comment on source/quality of PwC auditors (Auditor responded that PwC holds high standards and very comfortable with calibre of auditors), different principles in Accounting (done as per requirements), whether CEO needed further LTIs given his already large shareholding (still considered appropriate), whether ALL should have repaid their Jobkeeper subsidy (it was appropriate to retain at the time), with all AGM resolutions how many of their 44k shareholders actually voted (will consider this) and whether any material voting AGAINST by Proxy holders (overall, overwhelming support for all except one with some concern on one resolution)."