10 questions asked at 2022 Cochlear AGM
October 18, 2022
Here is the text of the 10 written questions asked at the 2022 hybrid Cochlear AGM, along with a summary of the response. All questions were read out in full, which is to Cochlear's credit.
1. On page 144 of the annual report, our former CEO Chris Roberts is listed as the 12th largest shareholder with 172,387 shares or 0.26%. Truth be told, he's not even in the top 50. Why don't you publish a top 20 list of beneficial holders, as opposed to all these inaccurate custody and nominee holdings which aggregate institutional holdings. And speaking of major shareholders, who and what is ABP, which has more than 5%, and why isn't Vanguard in there as a substantial holder along with the two other index giants, Blackrock and State Street?
Answer: chair said would look into Chris Roberts situation.
2. A question for the KPMG audit signing partner, Julian McPherson. Has he ever been involved with a public company that claimed its net assets of $1.685 billion were so much below its market capitalisation of $12.73 billion. That's only 13.2%. Can Julian explain this discrepancy and also clarify if we would suffer a tax bill if we wrote up the value of our brands? Also, it must have been difficult for Julian finding key audit matters to integrate. Why did Julian choose both warranties and trade receivables and do the accounting rules require that there be at least 2 key audit matters explored in the annual report of ASX listed companies, even when the accounts are so obviously clean and conservative?
Answer: auditor said accounting rules don't allow a write-up of intangibles and there's no limit on the number of key audit matters that must be mentioned.
3. A 5.8% remuneration report protest vote suggests one of the proxy advisers voted against. Which one and what was the issue?
Answer: chair said all 5 proxies recommended in favour of all resolutions and failed to explain the big protest vote.
4. In 2020, Yasmin Allen was one of the directors who voted to place $300m of the $880 million placement at $140 to a single London-based fund manager, Veritas, whilst proposing to limit all 50,000 retail shareholders to just $50m worth of shares. Whilst this was later increased to $220m, does she regret rejecting $197m of SPP applications from the 16,651 shareholders who applied?
Answer: chair did the predictable "it was desperate times, we had to act quickly" and concluded by saying the allocation balance broadly reflected the insto-retail split pre-raising. She failed to address the over-allocation to Veritas.
5. CSL has appointed its former long serving CEO, Dr Brian McNamee, as chair after a 5 year period away from the board. Could Michael de Prado, as the newest director, and our new chair Alison Deans please comment on whether our former CEO Catherine Livingstone has ever been approached to rejoin the Cochlear board. She did a great job as CBA and Telstra chair and retired from Cochlear more than 20 years ago, so why not try to get her back leading the company she helped build?
Answer: chair Alison Deans agreed Catherine is a legend but declined to reveal if she'd ever been approached to join the board.
6. Michael's former employer, Johnson and Johnson, has recently agreed to contribute $US5 billion to a $US26 billion settlement of opioid litigation. Could he comment on whether he was ever associated with J&J's opioid business and any lessons he may have learnt.
Answer: chair offered the candidate an opportunity to respond but he declined, which is perhaps telling.
7. Bank of Queensland treated retail shareholders very unfairly in a major raising last year when thousands of shareholders only received the offer document after the offer had closed. Could she reflect on any lessons from that situation?
Answer: chair offered the candidate an opportunity to respond but she declined, which is perhaps telling.
8. Why was there a 12.6% protest vote against Karen Penrose's re-election. Which proxy adviser recommended against and what was the issue? Is it a workload question? If so, what changes will she make?
Answer: chair said all 5 proxy advisers recommended in favour of all resolutions and failed to explain the big protest vote but given earlier AGM exchanges got the feeling that was the issue. Karen has been on 4 boards for 8 years, so chair wasn't sure why it is suddenly an issue.
9. Best practice is moving with proxy disclosure with companies such as NAB, Afterpay, TPG Telecom and Ausnet lodging the proxies with the ASX along with the formal addresses. Why did we withhold proxy voting disclosure until the debate started on all items today? Will we disclose them to the ASX ahead of next year's AGM and did all 5 proxy advisers recommend this increase in the NED fee cap?
Answer: we'll look at this but no promises.
10. Given the interesting discussions across a range of topics today, including this proposed pay rise for the NEDs, could the chair undertake to make an archived copy of the webcast plus a full transcript of proceedings available on the company's website, as most well governed companies are doing these days?
Answer: we already publish the webcast archive but no promises with a transcript.
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