13 questions asked at 2022 Lend Lease AGM

1. 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, including the election of Nick Collishaw? Has there been a material proxy protest vote against any of today's resolutions? Will you disclose the proxy votes before the debate on each resolutions so shareholders can ask questions about the reasons if there have been any protest votes? Also, why not disclose the proxies to the ASX with the formal addresses like others now do?

Chairman Michael Ullmer: Perhaps if I answer them as we go on. So Stephen, thank you for that question. So with respect to the proxy advisers, I can advise that every proxy adviser voted through their clients that they should vote in favour of every item – I'm sorry, with respect – obviously, then with respect to Nick, they were very, very comfortable that Nick will be and is a superb member of our Board. I know this is a question that you've raised before, and we've agreed to sort of agree as I know a number of my fellow chairs in the ASX do. So the real nub of the question is that, as part of the process, and you folks here are coming along to participate in the meeting. People are doing that online and by telephone, but there will be typically large Page 24 of 40 institutional investors all around the world who submit their votes in advance of the meeting. And those folks had to be in by 10am on this last Wednesday morning. So given that, as a Board and management, we clearly are aware of how those people have voted on each one of our resolutions. And then the question becomes, well, why don't we tell everyone in advance how everyone has voted to that point in time. And similarly, when we come to the next items on the agenda, why don't we put up those votes in advance so that you know how others have voted before you vote? Now that doesn't happen when you have a general election. People don't go out and count all the postal votes in advance and then post to say, "Well, this is how Australia has voted so far. How are you going to vote on the day?" And so my personal view on this is that a could stifle debate, if you looked at the proxy of votes and something that you looked at that and you said, "Well, given it's going to be voted for in this way anyway, why should I bother to get up and ask a question?" So I don't think it would add to anything. In fact, I think it would probably most likely lead to a stifling of debate. And so we will continue with our practice of putting up the proxy of votes after we've had the discussion, and you will then be in a position to see them. And obviously, they are then fully transparent. But Stephen, I put respect that you have a different opinion on this.

2. Tony Watson was the primary external tax adviser to Lend Lease for 20 years but then turned whistleblower against the company over an ATO tax investigation which has been dragging on for years. Could the chair and CEO please summarise precisely what is in despite, whether we have treated Mr Watson fairly and what is the likely timetable for this matter to be finally settled, both with Mr Watson and the ATO.

Answer: chair gave a detailed response noting the publicity, importance of the case and the publicity. Watch video via Twitter. The full transcript was as follows:

Michael Ullmer: I think it's important here to – and thank you, Stephen Mayne, for that question. I think it's important here to distinguish between 2 things. One is the discussions we are having with the Australian Tax Office, the ATO. And as a separate issue, there is a court action that's been taken by Tony Watson that involves the firm he used to work with and also has brought us into that action as well. So if I speak firstly about the interaction we're having with ATO, the action relates to some transactions relating to our Retirement Living business. And the particular matter is the sale of an interest in that business. We approached the tax office a year before that transaction was concluded and advice on what we were doing, how we're going to go about it. And then that was fully disclosed in our tax return in 2018. Page 23 of 40 Subsequently, there have been ongoing discussions with the Australian Tax Office about how that's been treated. We are of the view that it's entirely consistent with the rulings, the public rulings that are in place, and this matter has had very extensive public hearing. I would make it very clear that we are not in dispute with the tax office. So this – whilst it seems to have gone on a long time, and it has indeed, it is a very complex matter. The way it is settled will have ramifications potentially, not just for Lendlease, but for the rest of the retirement living industry and potentially for corporate tax generally. And so it is a very significant matter that needs to be carefully thought through and resolved. But throughout this process, we have had strong engagement and collaboration with the tax office. They have been very open in the way they have been discussing with us. We are regarded by the tax office as a very open and trustworthy player. And I would hope that it will get resolved soon, but that is something where we have to come to the appropriate landing in our discussions with the tax office. With respect to the matter involving Tony Watson, that is, as I'm sure, Stephen, you are aware, the subject of court proceedings. We vigorously will defend those proceedings because we believe Lendlease, as it always does, has acted with the utmost integrity in this matter. But given there is a legal process underway, I think, Stephen, you'd appreciate that it's inappropriate for me to say anything more on that matter.

3. Thank you to Jane Hemstritch for her long contribution to the board. As her final public contribution before retiring from the board at the conclusion of today's meeting, could Jane comment on the three things she is most proud of about Lend Lease's performance during her time on the board and any regrets she might have.

Answer: most proud of global accounting systems, safety and sustainability progress and declined to answer regrets question. Watch video via Twitter. Full answer from the transcript:

Michael Ullmer: Well, it's easy for me to say this, I'm very happy for Jane to do that if she would like to. So Jane, without notice.

Jane Sharman Hemstritch, Lendlease Group: Without notice, an awful lot has changed at Lendlease during the period that I've been on the Board. And one of the things that I'm proud of to have contributed to is the fact that, when I started at Lendlease, some of the accounting systems were elderly, to say the least. And a big investment was made in replacing those and rolling them out globally so that Lendlease could behave as a global organization. And I'm proud that I was able to contribute when young Mr. Lombardo was in charge of this project to getting that project executed and successfully rolled out, not without some lumps and bumps, but we got there. And that my expertise was able to contribute to that, I feel very good about. Not that I had much to do with it, but I'm tremendously proud of the company for what's been created during my tenure. Barangaroo was a slab of concrete when I started. And now it's a thriving downtown sort of new heart of Sydney almost. I said that as a Melburnian, so clearly, I don't know what I'm talking about. And I'm also extraordinarily proud of the stand that the company takes over safety and sustainability. It truly is a leader, I think, in corporate Australia. So those are the things that I think the company has made tremendous progress in over the period that I've been on the Board. Regrets, I've had a few, but then again, too few to mention.

4. When disclosing the outcome of voting on all resolutions today, including the remuneration report, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will show respect for retail shareholders and provide a better gauge of retail sentiment on all resolutions and was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus last year and Webjet and Tabcorp so far this AGM season. Also, the annual report says out total shareholder numbers dropped from 70,148 to 65,944 over the past 12 months. Were there particular brokers that had a sell recommendation on Lend Lease?

Answer: we'll look at it. Chair was right that falling shareholder numbers were totally irrelevant to the rem report discussion.

5. Michael Ullmer joined the board in 2011 and has been chairman for 4 years. Is he intending to retire when his current term expires, particularly given his length of service and the recent poor performance, and does Michael believe the next chairman is currently on the board?

Michael Ullmer: So in terms of a discussion around chairmanship and potentials, that's not something, Stephen, that it's appropriate to have at this juncture. But I can assure you is the way we have demonstrated our Board renewal over at least the last 5 years plus where we've brought on a highly credentialed director at least 1 every year. And we currently have a search underway for another director to come on in – possibly based out of the U.K. or Europe, given our business there. We have Margaret Lui coming in, who's based up in Asia. I think we've demonstrated that we take very seriously Board, ensuring we've got the right skills and diversity around the Board table and that we have in place appropriate succession planning. As you see with Jane stepping down from the Board, we have Margaret Lui joining the Board. So I can assure you we take all of those things very seriously. But that's a discussion that's not appropriate to be having in the public domain at this stage.

6. One of Nick Collishaw's most recent public company roles was as chairman of Redcape Hotels Group, Australia's second largest listed poker machine operator, with a concentration of venues in western Sydney. On October 26, the NSW Crime Commission released a damning report about money laundering through poker machines in NSW pubs and clubs. Could Nick Collishaw comment on his personal approach to ESG, including how he dealt with the risks of poker machine money laundering when he chaired Redcape, which was privatised in 2021. Given the chair was also a long term director of Woolworths when it was the largest poker machine operator until the 2021 Endeavour Group demerger, could he also comment on what steps he took to mitigate money laundering in the Australian gambling industry and whether the Crime Commission report surprised him.

Answer: chair batted away pokies questions as not relevant. Fair enough. Transcript was as follows:

Michael Ullmer: Stephen, thank you for the question on that important topic of poker machines. My judgment is that both parts of that question, the first part to Nick, the second part to me, are actually – and they're very specific to poker machines, which I don't think is something relevant to the meeting here today to the business that we're considering with respect to the Lendlease Group, so that's not something that I think is appropriate for either Nick or me to be commenting on, poker machines in the context of Lendlease business. So Wendy, are there any other questions on...

7. When a major project is blowing out and their are high stakes negotiations with governments, partners and sub-contractors, such as what occurred with the Metro Tunnel project in Melbourne, how does the board balance the approach between fully disclosing the situation to the market and preserving its negotiating position. As an independent director, could David Craig comment on when and how the board gets involved in these decisions. What are the monetary delegation levels under which management can settle a dispute without seeking specific full board approval.

Michael Ullmer: I think for a question like that, which Stephen is going very much to Board governance, as opposed to an individual director, I think it's probably fairer that I should answer that. And what I would say on this is that, with respect to any contractual matter of the nature you describe, management in my experience on the Board have always been very transparent in bringing it to the attention of the Board very quickly. And so as Chair – and I know David Crawford, my predecessor, would also say the same, we've been very impressed that the preparedness of the CEOs at the time to flag up issues very quickly. And then we make a judgment as to whether that's something where we need to engage with the Board immediately or whether it's something that we would bring up the next Page 31 of 40 available Board meeting. And so with respect to any matters of the nature you describe, I can assure you that there is heavy involvement from the Board in terms of both supporting management, identifying ways forward, making sure that management are handling the matter in the right way, ensuring also that we support the recommendations going forward or alternatively suggesting and requiring, in some cases, alternative pathways. So that's the way that process works from the perspective of continuous disclosure. Your question around, well, when do you put these things out into the public domain, again, I think Lendlease we've shown very strongly the trust and integrity with which we treat the market in the sense that you clearly it's inappropriate when things are stood in the discussion phase, ideas and positions are still being formulated that, that happens within the confidential confines of the company. But at the moment that you have something which is an obligation, you then advise the market of any matter that may be sensitive from a price point of view. So that's the way we approach that, and I'm very confident we do that in an appropriate fashion, Stephen. Any other questions?

8. Aware Super is Australia's third biggest industry fund managing $125 billion, primarily for NSW public sector and workers in the health industry. The Lend Lease annual report discloses that they are our largest shareholder with 8.56%, ahead of the 3 big global index funds - Blackrock, Vanguard and State Street- which each own just above 6%. This is a very unusual situation for an industry fund to go so heavily into one stock, in this case to the detriment of NSW public servants given Lend Lease shares have fallen from a peak of more than $20 in 2019 to less than $8 today. What is the history of Aware Super's huge investment in Lend Lease and how does our engagement with them differ from our engagement with the big global index funds which are normally too widely invested to bother meeting with individual companies.

Answer: chair gave a long answer explaining that Aware was a wholesale partner in many projects around the world, including Barangaroo. Interesting. Watch video via Twitter. Here is the full answer from the transcript:

Michael Ullmer: Thank you, Stephen. There are a lot of assumptions in that question, and it's not for me to sort of go behind Aware's investment strategy. You do pull out some sort of points there around sort of stock presses in 2019, which – as you will know from your close reading, Stephen, of annual reports, not of just this year, but years previously, predate when Aware would have come on our register. So that – obviously, that's not relevant. We, as an organization, treat our responsibilities in meeting shareholders very seriously, and we do meet representatives of many of the large shareholding groups around the world. So I can only comment on Aware from the perspective of Lendlease. And what I would say from the perspective of Lendlease, and this is in the public domain, is that Aware have had an excellent relationship with us for a number of years in being one of our key capital partners. Page 27 of 40 And what we mean by that is, when we go into one of our large developments, we will typically bring in capital partners to invest alongside us. So if you look at something like Barangaroo, which we've talked about already, there are a number of large institutional investors who have invested directly into Barangaroo, not into our stock, alongside the investments we make. Now Aware have been a very strong partner of ours. We have relationships with them, where in our developments in the U.S. they are a strong capital partner, and that has been a wonderful relationship. I think what that suggests, Stephen, is that Aware see good alignment between their values, what they stand for as an organization and our values and what we stand for. They clearly like what we do in terms of the product that we create, and they clearly see that it has long-term value. So the fact that they have chosen to then come on to our register at the top level in terms of owning an interest directly in the company suggests to me that it's a great validation of what we do as an organization and in the value that they see in Lendlease over the long term. Because quite properly, like all super funds, I would imagine that they have a long-term perspective on their investments.

9. Margaret Lui was announced as a director on September 28 and the ASX announcement said that she would be standing for election at today's AGM, but not formally joining the board until December 1. As a lawyer, could Nicola comment on why Margaret wasn't put up for election today when we initially said that she would be? Was it something to do with how many directors have to be elected each year and who was up for election? Also, what was the recruitment process for Margaret's appointment. Was a head hunter involved and did the board interview multiple candidates?

Answer: I botched this because the ASX announcement said she'd be elected next year. However, rather than taking the "get your facts right" defence, the chair could have explained why she wasn't put up this year. From the transcript:

Michael Ullmer: So Stephen, thank you for that question. I think, first up, Wendy, do you – can you just read the first paragraph of the press release or the ASX release, sorry, that Stephen refers to?

Wendy Lee: Yes, of course, Chairman. Dated the 28th of September 2022, Lendlease appoints Ann Soo Chan Margaret Lui to the Board. Lendlease today announced the appointment of Ann Soo Chan and Margaret Lui to the Lendlease Board as an independent Non executive Director effective 1st of December 2022. Ms. Lui will stand for election at Lendlease's Annual General Meeting on 17th of November 2023.

Michael Ullmer: Stephen, I think it's pretty clear from the ASX release that we said she would be appointed on 1 December 2022. They do say that facts spoil a good argument. So with respect to the other matters you raised, we are discussing now the re-election of Nicola and not the election of Margaret, which will be covered at next year's AGM as is appropriate. So I don't think we need to go any further with that question.

10. Chair, the proxies screen was not visible for those watching online. Please read out the percentage in favour figure. Given the lack of debate, surely you can now see the benefit of early proxy votes disclosure to the ASX providing timely advice to all 65,000 shareholders, rather than this straw man argument that advising the ASX early is somehow inhibiting debate at the AGM. More than 99% of voted stock is down by proxy ahead of time, so this comparison with postal and election day political voting is not valid. As board candidates, you already have the data, unlike politicians. Please share it across all platforms in a timely manner.

Answer: chair promised to read out the proxies and said we needed to agree to disagree re early proxies. Watch video via Twitter. From the transcript:

Michael Ullmer: So Stephen, to anyone online, if you're unable to see that screen come up, because I was making the assumption that whatever we see in the room here, you can see, I apologize, online, but Wendy, I'm sure somebody is looking into that as they should do. But to help you, I will call that out. So with respect to the proxy firstly that we've just done on Nick Collishaw, the votes – proxy votes in favour of Nick re-election were 98.98%. And we will read out the proxy votes that have been received in advance for the subsequent resolutions, just in case there's a need for clarity on that. So thank you, Stephen, for pointing that up. And by the way, I'm not going to re-litigate the point. You have your view. I've expressed mine, and I respect you're right to have that. So thank you. So any more questions online for David?

11. Could the CEO summarise his past LTI grants as to whether they have vested or lapsed. Also, has he ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company? Please don't say look it up in the annual report and through ASX announcements. It's complicated and the CEO could factually summarise the situation in 30 seconds.

Answer: chair took too many of the questions and arguably took too long explaining each issue, as occurred on this one. However, when given the chance, CEO Tony Lombardo demonstrated he was right across the situation. Watch video via Twitter. From the transcript:

Michael Ullmer: I'm happy for Tony to address that. I'll just make an overriding observation, which is long-term awards are very much about providing long-term incentives, by the definition, and really to incentivize our senior executives to remain committed to the company and continuing to deliver for us. That's absolutely essential that they align to the performance of our security holders. So when our security holders have a disappointing performance, as they have done in recent years, that has to be mirrored in the performance that our senior executives who received long-term awards. And obviously, Tony is the most senior executive who receives the largest long-term award. And as we set out in our remuneration report – and I can assure you, it is not something of pride. Those long-term awards that are subject to performance testing have not vested in the last 4 years. And unfortunately, you as security holders can understand why that would be. But that as a preamble, Tony, can you just respond to Stephen's questions? Thank you.

CEO Tony Lombardo: Well, over the last 4 years I haven't received any LTI or performance rights, so they've all lapsed. In terms of my holdings today, I have 167,000 broken into 26,000 direct shares. I have a number of restricted awards through my program, and that's some 80,000 shares. And then I have through this year, as we went back to part of my STIs paid in cash and part of that is paid in deferred stock, I have some 59,000 rights. So that's a total of 167,000. And then I've got a number of grants awarded to me over the last 4 years of some 320,000 deferred performance rights, which need to get performance tested. Hopefully, that's only 30 seconds.

Michael Ullmer: So as you can see, firstly, not surprisingly, Tony is across his incentives. Secondly, he is seriously invested in the company and has every incentive to do things that will deliver the security holder performance that we would like to see and what we're striving for. And thank you for answering it in 30 seconds. Are any more questions o

12. There was a 10% vote against the rem report despite all proxy advisers recommending in favour. This is very unusual. Voting is not a secret ballot for the directors. Are you Aware you voted against. Was it Aware Super? Has a similar protest vote been lodged on the LTI grant and what was the issue that drove the rem protest vote.

Answer: chair was probably right in his assessment that some shareholders lashed out on rem based on the falling share price. Here is the full answer from the transcript:

Michael Ullmer: So first off, I don't think it's appropriate to be talking about how individual security holders have voted, and many people would find that quite unusual. Secondly, you're absolutely right, Stephen, that with all proxy advisers voting in recommending a vote in favour, normally, one would see a higher proportion of security holders supporting the resolution. As you note, it is just over 10% have voted against. So another way, being an optimist, who looks on the positive side of things, it does mean almost 90% voted for. What I would say is, when you have a statutory loss, there will be some people who will say, "We don't care what management achieved. And it's not around effort. It's around what's delivered and what's achieved. We don't care what they've achieved in other areas. They don't deserve to get anything." And that may be where people are coming from. There may be people who like us are disappointed with where the security price has traded. I would note, by the way, that all real estate stocks have come off. But Lendlease, I acknowledge, has come off further than some. And that, I suspect, reflects the fact that we have a global exposure to places like the U.K. We're clearly going through some political turmoil and the like at the moment. So there will be a range of factors. And when people are unhappy, one of the ways of expressing that is by voting against the remuneration report. That is entirely their right. It's something that the Board takes extremely seriously. And we respect the right of shareholders to express their views in that way. But at the end of the day, I'm very pleased that we have the level of support that we have had for that resolution.

13. Final question. Thank you for reading out all my questions without censorship today. Chair, you performed well in difficult circumstances and are clearly across the brief. Well done last year for producing your first AGM transcript, in addition to publishing an archive of the webcast. Will you do this again this year?

Answer: Yes, we aim to be transparent and will do it again this year. Thank you for the compliment. Watch video via Twitter. From the transcript:

Michael Ullmer: So the answer to that, Stephen, as we try and do in all things, which is to continually improve and to set leadership standards, and we absolutely will be publishing the full transcript. So the point Stephen is making there is that, for many people, it's useful to see literally the verbatim transcript of everything that happened at this meeting, and we published that in full for the ASX last year. We do that again this year. And Stephen, for someone who is so experienced in the field and take such an active interest, thank you for the comments with respect to my performance, and I will continue to try and live up to your expectations.

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