RBA loan to Macquarie
1. As was discussed at last year's AGM, Macquarie has borrowed $11.3 billion from the Reserve Bank through its Term Finance Facility on a 3 year deal at a fixed rate of 0.1%, which is repayable on June 30, 2024. Is it out intention to wait until the end of June to repay that facility, given than an $11.3 billion loan at the current official RBA rate of 4.1% would cost $463 million a year in interest or $1.27 million a day. We will only pay $34 million in total over the 3 year term of the loan. CFO Alex Harvey mentioned last year that Macquarie had extended another $37.5 billion in mortgage credit and $2.5 billion in small to medium sized business loans since the RBA loan was taken out. Is there any update on these figures and will we have to call in some of these loans when the $11.3 billion is fully repaid. Also, how much money does Macquarie currently have on deposit with the RBA and what rate of interest is our central bank paying us?
Answer: Watch video of question being voiced and Glenn Stevens not biting. CFO Alex Harvey says loan will be repaid on June 30 next year and refused to reveal how much Macquarie currently has deposited with the RBA but says the sector had $300 billion as at June 30, and this was paying 4% interest, based on the formula of the 4.1% cash rate, minus 10 basis points. See video of Alex response via Twitter.
Our history in the crisis-ridden UK water sector
2. The UK water industry is currently in a debt crisis with talk of nationalisation amidst various environmental and performance problems. The Guardian newspaper published a lengthy business feature on Macquarie's involvement on July 10 in which it reported that debt at Thames Water rose from £3.4 billion to £10.8 billion during the Macquarie consortium's ownership from 2006 to 2017. During the same 11 year period, The Guardian claimed Thames Water paid dividends of £2.7 billion to shareholders. Could Shemara please comment on the role she played in the Thames Water investment and whether she is concerned by recent developments and could chair Glenn Stevens advise if the board has sought any independent revue of Macquarie's investments in the UK water sector. Given our ongoing enormous investments in UK infrastructure, is it perhaps time to diversity our Sydney-focused board and appoint at least one UK-based independent director?
Answer: After the question was voiced, chair Glenn Stevens briefly defended the investment (see video). Shemara then delivered a very detailed response which exceeded 5 minutes. See her opening comments about the Thames Water debt crisis, the middle bit claiming the Macquarie return was only around 5% a year and the final bit referencing "vampire kangaroo" media coverage in the UK. All of this generated a follow-up story in The Guardian.
Board diversity and connections of newest director
3. Macquarie now has 6 female directors, which is the most of any ASX-listed company and a majority. We also have a female CEO, company secretary, outgoing audit signing partner and incoming audit signing partner. Well done. When it comes to diversity, the main gripe is Macquarie's lack of geographic diversity on the board, with the vast majority living in Sydney. Is this something which has happened by accident or design? Also, did we use a head hunting firm to help recruit Susan Lloyd-Hurwitz? Were multiple candidates interviewed and could Susan detail which of the existing Macquarie directors she knew before engaging in the recruitment process.
Answer: Glenn Stevens said they did use a search but a number of the directors knew Susan and were keen to snap her up once she retired from Mirvac. See video via Twitter.
Remuneration report proxy disclosure and Nick O'Kane's record bonuses
4. After ISS recommended a vote against Macquarie's remuneration report, we are likely to suffer our biggest remuneration report protest vote since 2007 when there was a 21.4% against vote. Why hasn't the proxy position been disclosed in a timely manner to facilitate discussion about the against vote, what concerns did ISS raise and how big is the protest vote? Could remuneration committee chair Jillian Broadbent also explain on what grounds commodities and global markets boss Nick O'Kane was paid $57.6 million pre-tax last year and $120 million over the past 3 years, a record at Macquarie. Surely more of this bonus should have gone to the broader divisional team, as opposed to the single man at the top. Could Shemara also comment if she is comfortable having someone who reports to her paid $24 million more than she got last financial year. Shouldn't the system always see the CEO of the entire enterprise paid the highest bonus?
Answer: Firstly, see video of question being accurately voiced and then Glenn Stevens giving ISS a spray. Also, see rem committee chair Jillian Broadbent defend the Nick O'Kane package. Finally, watch Shemara defend Nick O'Kane's package on the grounds that he could earn "multiples of what he does" if he worked elsewhere.
PwC's change of auditor and Macquarie's ongoing commitment
5. PwC has been the auditor of Macquarie since before the 1996 listing and the job has never been tendered. It has been paid more than $1 billion by Macquarie for auditing and other services over this period, including $79 million this year and $72.7 million in the previous year. Kristin Stubbins was PwC's Macquarie audit signing partner for the 4th time this year whilst simultaneously performing the role of Acting CEO of PwC Australia during the tax leaks crisis that has rolled through the PwC Australian business in recent months. Could Kristin please explain how she was able to simultaneously perform both roles in recent months and does this explain the decision to appoint Voula Papageorgiou as audit signing partner next year after 4 years when the rotation of audit signing partners normally extends to 5 years. Also, have we made a definitive decision to tender the audit job in 2024 for the first time?
Answer: Macquarie carefully avoided the PwC pile on, saying the audit review outcome will be announced next year. Watch Glenn Stevens wish Kristin Stubbins all the best. She wasn't there.
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