Max Moore-Wilton comes out swinging
February 2, 2010
Dear Mayne Reporters,
we heard some great exchanges at the Macquarie Airports AGM today so let's cut straight to chase and present the edited audio highlights:
ASA question and waffly explanation of outrageous $147m performance fee
Debate about poor governance, tanking stock and sacking Macquarie as manager
Audit conflicts and surely Sydney Airport isn't worth $11bn?
Why hide in dodgy Bermuda?
Max Moore-Wilton vs Mayne Report in full
Max Moore-Wilton developed a well-earnt reputation for ruthless efficiency and straight talking during his many years as John Howard's chief bureaucrat and his aggressive personality was on full display today. However, his blunt rebuttals were also quite amusing and it was refreshing to cross swords with a swashbuckling chair rather than the polite wafflers who dominate AGMs these days. We also had a friendly chat after the meeting.
MAP was never going to make it easy to understand its extraordinarily complex and appallingly governed structure. Shareholders were only sent the notice of meeting and even at the AGM it took about half an hour to turn up a copy of the glossy annual report. The full financials, which detail the latest outrageous year of fee-gouging, were nowhere to be seen, but we did get a lovely Macquarie-branded memory stick in the shape of an aeroplane on the way in.
The Australian Shareholders' Association was clearly duchessed by the Millionaires Factory as their spokesman Dan Steiner had his own Macquarie-supplied name tag and Max the Axe referred to him warmly within a minute of opening the meeting.
However, at least Dan opened the questions with one on this outrageous $147 million performance fee that Macquarie Airports Group (MAG) paid to Macquarie Bank, whilst MAG's 64% shareholder, the publicly listed Macquarie Airports that us punters invest in, copped share price under performance and paid no performance fees.
Max clearly new this was coming as he read out a typically long and turgid Macquarie justification whilst also admitting it would never happen again because these fees were banned in the future after a big terminaton fee was paid. Have a listen to the explanation here.
The formal presentations didn't shy away from the staggering 35% discount to net tangible assets that MAP is trading at, but Max and CEO Kerrie Mather came up with all sorts of excuses such as short selling, market instability and the credit crunch to explain the missing $3.3 billion in market value.
My opening salvo focused on "the elephant in the room" - MAP's appalling governance and the discount that applies arguably because of the fee-gouging which has now easily topped $1 billion when you include every fee on every Macquarie airport deal over the past decade.
Max declared that he couldn't see any elephant in the room, but did describe the discount - directors claim an NTA of $5.06 but the stock is at $3.15 - as "an appalling situation".
I really let fly in two stints about all these governance issues and conflicts, but Max gave as a good as he got, concluding his response by saying "you are significantly out of sync with informed opinion". Have listen to the full exchange here.
Making it tough to ask sustained questions
MAP did some of the usual tricks to try and limit questions. Each shareholders was told to ask one question at a time and you had to go right to the front to reach a microphone and stand about 3 metres from the elevated board in the James Cook room at the Intercontinental Hotel, which was all quite intimidating.
Whilst there was no attempt to limit general questions which lasted for about an hour, Max then grouped the debate for all five specific resolutions into one lump. I was planning to get up on four of them but with no-one else wanting to ask questions and 200-plus hungry greys waiting to hop into the generous spread, I limited it to a question on the auditor and a spray about being based in Bermuda.
Max was labelled a "director for life" because he never has to face election and I also pointed out that my tilt at the Macquarie Infrastructure Board three years ago was rejected because the Bermudans require outside candidates to own 5% of the company.
On being told that I would like an opportunity to vote against Max and perhaps it was time John Howard's mate handed over to a more Labor-friendly chairman, Max generated plenty of laughs by opening his response with the line: "As you know, it is personally distressing that you could not vote against me."
He then launched a strong defence of Bermuda and denied that the new Labor Government would be concerned by this sort of aggressive and poorly governed structuring. Have a listen to the full exchange here.
Sydney Airport is worth "substantially more" than $11 billion
Sydneysiders who get gouged left right and centre using their Macquarie-run airport will be delighted to know that Max Moore-Wilton reckons it is worth "substantially more" than the current book value of $11 billion.
Max fell for the old sucker punch when I hit the auditor and the board with a question about conflicts of interests and asked how PwC could possibly agree to an NTA of $5.06 with the stock at a 35% discount. Surely this meant it was reckless to have doubled the book value of Sydney Airport over the past six years and that a big write off was coming, given that the Sydney investment represented a clear majority of MAP's assets.
Monopolists need to be careful about gloating about how much money a highly regulated business is being allowed to make, but Max fell for it with the following quote:
"I would be quite confident that Sydney Airport could be sold for its current value and substantially more."
That should be page one in The Daily Telegraph. Here we have the man who was responsible for selling Sydney Airport gloating that his new private employer has more than doubled its money into what is now probably the second most valuable single asset in Australia after the North West Shelf gas project. Have a listen to the full exchange as there is also some interesting stuff on the PwC conflict given that Macquarie comprises about 5% of its Australian revenues.
In conclusion: New video plus two corrections
That's all for now as there's a half hour journos forum on 702 ABC Sydney to get ready for at 5.30pm, plus a quick interview with Lateline for a story that will run ahead of an interview with ASIC chairman Tony D'Aloisio tonight.
We've also just posted this new video getting stuck into Alan Kohler's very soft budget commentary and there are two corrections from last night's edition. Caliburn is advising Westpac, not St George, but it is interesting that Westpac director Gordon Cairns, the former CEO of Lion Nathan, is chairman of Caliburn's advisory board. Also, we said that Nicholas Moore remains a director of MAP, when he resigned a short while back in preparation for taking the top job at Macquarie Group. The MAP spinners were also keen to point out that he wasn't a director of MAG which agreed to all those huge termination and performance fees in 2007.
We'll be back in your inbox again tomorrow with a special report on the Westfield AGM, which should be almost as much fun as MAP today.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
we heard some great exchanges at the Macquarie Airports AGM today so let's cut straight to chase and present the edited audio highlights:
ASA question and waffly explanation of outrageous $147m performance fee
Debate about poor governance, tanking stock and sacking Macquarie as manager
Audit conflicts and surely Sydney Airport isn't worth $11bn?
Why hide in dodgy Bermuda?
Max Moore-Wilton vs Mayne Report in full
Max Moore-Wilton developed a well-earnt reputation for ruthless efficiency and straight talking during his many years as John Howard's chief bureaucrat and his aggressive personality was on full display today. However, his blunt rebuttals were also quite amusing and it was refreshing to cross swords with a swashbuckling chair rather than the polite wafflers who dominate AGMs these days. We also had a friendly chat after the meeting.
MAP was never going to make it easy to understand its extraordinarily complex and appallingly governed structure. Shareholders were only sent the notice of meeting and even at the AGM it took about half an hour to turn up a copy of the glossy annual report. The full financials, which detail the latest outrageous year of fee-gouging, were nowhere to be seen, but we did get a lovely Macquarie-branded memory stick in the shape of an aeroplane on the way in.
The Australian Shareholders' Association was clearly duchessed by the Millionaires Factory as their spokesman Dan Steiner had his own Macquarie-supplied name tag and Max the Axe referred to him warmly within a minute of opening the meeting.
However, at least Dan opened the questions with one on this outrageous $147 million performance fee that Macquarie Airports Group (MAG) paid to Macquarie Bank, whilst MAG's 64% shareholder, the publicly listed Macquarie Airports that us punters invest in, copped share price under performance and paid no performance fees.
Max clearly new this was coming as he read out a typically long and turgid Macquarie justification whilst also admitting it would never happen again because these fees were banned in the future after a big terminaton fee was paid. Have a listen to the explanation here.
The formal presentations didn't shy away from the staggering 35% discount to net tangible assets that MAP is trading at, but Max and CEO Kerrie Mather came up with all sorts of excuses such as short selling, market instability and the credit crunch to explain the missing $3.3 billion in market value.
My opening salvo focused on "the elephant in the room" - MAP's appalling governance and the discount that applies arguably because of the fee-gouging which has now easily topped $1 billion when you include every fee on every Macquarie airport deal over the past decade.
Max declared that he couldn't see any elephant in the room, but did describe the discount - directors claim an NTA of $5.06 but the stock is at $3.15 - as "an appalling situation".
I really let fly in two stints about all these governance issues and conflicts, but Max gave as a good as he got, concluding his response by saying "you are significantly out of sync with informed opinion". Have listen to the full exchange here.
Making it tough to ask sustained questions
MAP did some of the usual tricks to try and limit questions. Each shareholders was told to ask one question at a time and you had to go right to the front to reach a microphone and stand about 3 metres from the elevated board in the James Cook room at the Intercontinental Hotel, which was all quite intimidating.
Whilst there was no attempt to limit general questions which lasted for about an hour, Max then grouped the debate for all five specific resolutions into one lump. I was planning to get up on four of them but with no-one else wanting to ask questions and 200-plus hungry greys waiting to hop into the generous spread, I limited it to a question on the auditor and a spray about being based in Bermuda.
Max was labelled a "director for life" because he never has to face election and I also pointed out that my tilt at the Macquarie Infrastructure Board three years ago was rejected because the Bermudans require outside candidates to own 5% of the company.
On being told that I would like an opportunity to vote against Max and perhaps it was time John Howard's mate handed over to a more Labor-friendly chairman, Max generated plenty of laughs by opening his response with the line: "As you know, it is personally distressing that you could not vote against me."
He then launched a strong defence of Bermuda and denied that the new Labor Government would be concerned by this sort of aggressive and poorly governed structuring. Have a listen to the full exchange here.
Sydney Airport is worth "substantially more" than $11 billion
Sydneysiders who get gouged left right and centre using their Macquarie-run airport will be delighted to know that Max Moore-Wilton reckons it is worth "substantially more" than the current book value of $11 billion.
Max fell for the old sucker punch when I hit the auditor and the board with a question about conflicts of interests and asked how PwC could possibly agree to an NTA of $5.06 with the stock at a 35% discount. Surely this meant it was reckless to have doubled the book value of Sydney Airport over the past six years and that a big write off was coming, given that the Sydney investment represented a clear majority of MAP's assets.
Monopolists need to be careful about gloating about how much money a highly regulated business is being allowed to make, but Max fell for it with the following quote:
"I would be quite confident that Sydney Airport could be sold for its current value and substantially more."
That should be page one in The Daily Telegraph. Here we have the man who was responsible for selling Sydney Airport gloating that his new private employer has more than doubled its money into what is now probably the second most valuable single asset in Australia after the North West Shelf gas project. Have a listen to the full exchange as there is also some interesting stuff on the PwC conflict given that Macquarie comprises about 5% of its Australian revenues.
In conclusion: New video plus two corrections
That's all for now as there's a half hour journos forum on 702 ABC Sydney to get ready for at 5.30pm, plus a quick interview with Lateline for a story that will run ahead of an interview with ASIC chairman Tony D'Aloisio tonight.
We've also just posted this new video getting stuck into Alan Kohler's very soft budget commentary and there are two corrections from last night's edition. Caliburn is advising Westpac, not St George, but it is interesting that Westpac director Gordon Cairns, the former CEO of Lion Nathan, is chairman of Caliburn's advisory board. Also, we said that Nicholas Moore remains a director of MAP, when he resigned a short while back in preparation for taking the top job at Macquarie Group. The MAP spinners were also keen to point out that he wasn't a director of MAG which agreed to all those huge termination and performance fees in 2007.
We'll be back in your inbox again tomorrow with a special report on the Westfield AGM, which should be almost as much fun as MAP today.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.