6 questions asked at 2023 Cochlear AGM
November 24, 2023
Here is the text of the 6 questions asked at the 2023 Cochlear hybrid AGM held on October 17, along with a summary of the answers and some video highlights. See webcast of 91 minute meeting.
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? If so, what reasons did they give? Will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons if there have been any protest votes? I asked last year if you would disclose the proxy position to the ASX with the formal addresses to offer more timely disclosure to the market? Why did you reject this request when more and more companies are now doing it?
Answer: Chair said all proxy advisers were supportive on all resolution and refused again to move on early proxy disclosure - watch video of exchange via Twitter.
2. Thank you for offering shareholders a hybrid AGM this year and will you commit to keep doing this in future years to maximise shareholder participation? Big companies like Bank of Queensland, Bega Cheese, BHP, Boral, Brickworks, Commonwealth Bank, Flight Centre, Fortescue Metals, Harvey Norman, Metcash, Origin Energy, Premier Investments, Ramsay Healthcare, Rio Tinto, Seven Group, Soul Pattinson, Super Retail, Whitehaven Coal and Worley all banned online questions and voting in 2022, so well done for showing them up. What was the experience like from your end?
Answer: chair said it was fine and they are happy to do it.
3. In April 2020, Bruce Robinson was one of the Cochlear directors who treated retail shareholders poorly in a capital raising, by supporting a discounted $880 million institutional placement at $140 a share, followed by a $50 million SPP for retail shareholders which was patently too small. $300 million of the placement was allocated to a single London-based fund manager Veritas Asset Management, 6 times the amount that was proposed for Cochlear's 37,000 retail shareholders in the SPP. Cochlear ended up expanding the SPP to $220 million after receiving $417 million worth of applications from 16,651 retail shareholders. It refunded $197 million and used a scale back formula favouring wealthier retail shareholders, which included the directors. Given this disappointing history, could Bruce and the chair commit to using the fairer PAITREO structure that treats all shareholders equally, in future capital raisings.
Answer: Chair Alison Deans read from a script claiming the raising saved the company and no retail shareholder was diluted - watch video of exchange via Twitter, including this part two. This argument is only sustained if you ignore the circa 21,000 retail shareholders who didn't even apply for SPP shares, partly because they were told only $50m was available.
4. 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 60 seconds.
Answer: watch video of exchange via Twitter.
5. In April 2020, Cochlear placed $300 million worth of shares at $140 to a single London-based fund manager, Veritas Asset Management. With Cochlear shares today at $255, Veritas would be sitting on a $246 million profit if the placement stock was still held. How large is the Veritas shareholding today and what engagement did company representatives have with this single foreign investor over the past year? In hindsight, do the chair and CEO agree that giving such a large allocation to a single foreign investor in a heavily over-subscribed placement was a mistake that unfairly diluted retail shareholders.
Answer: watch video of exchange via Twitter.
6. Cochlear shares are the second most expensive in the market after CSL, which doesn't help for capital management when dealing with matters like SPPs, DRPs and small investors seeking to purchase a $500 marketable parcel. As the proud owner of 2 shares, could you please do a 10-for-1 share split to bring the stock down to a more manageable $25 a share. Could Sir Michael comment as to whether he would support this and does the chair agree that director ego is a driver in terms of arguments against doing share splits because directors are proud of the growth achieved. If Transurban, Fortescue and CSL can do share splits, why can't we?
Answer: chair Alison Deans batted this away saying it wasn't been considered and such a proposal would come at "considerable cost" - watch video of exchange via Twitter.
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