6 questions asked at 2024 Macquarie AGM

Q1. PwC has been the auditor of Macquarie since before the 1996 listing and the job has never been tendered. PwC has been paid more than $1 billion by Macquarie for auditing and other services over this period, including $66.2m in the latest year, $79m in 2023 and $72.7 million in 2022. Voula Papageorgiou replaced Kristin Stubbins as the PWC audit signing partner this year. In terms of the audit process, could Voula please provide a brief summary of how many people assist in the audit and why it costs shareholders so much? Was Kristin Stubbins part of her team? Could Voula also address the question of where the line is drawn in terms of auditing Macquarie Group and auditing the various funds within the empire. Finally, could the audit committee chair comment on why we didn't put the audit to tender and whether, in making that decision, we negotiated a lower fee during the major review that was promised at last year's AGM. Why did PwC get paid $13m less this year?

Answer: Chairman Glenn Stevens declined to let Voula speak but confirmed they'd changed the policy and would have mandatory tenders every 10 years starting no later than 2026. See video of question and extended response via Twitter.

Q2. As was discussed at last year's AGM, Macquarie borrowed $11.3 billion from the Reserve Bank through its COVID emergency Term Finance Facility on a 3 year deal at a fixed rate of just 0.1%, which was repayable on June 30, 2024. Did we repay the lot on June 30 and where did we source alternative funding from? CFO Alex Harvey mentioned at the 2022 AGM 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 in 2021. Is there any update on these figures and have we had to call in some of these loans when the $11.3 billion was 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: Chairman Glenn Stevens declined to let Alex Harvey speak this year and said the refinance had been smoothly handled with no impact on its lending book. See video of exchange via Twitter.

Q3. Former Macquarie CEO Nicholas Moore gave an interview last year when he observed that "keeping us safe, reputationally" was a key point Macquarie asked of their teams before supporting proposed investments. In light of this, do we have any regrets about getting involved in the UK water sector? We had a profitable 11 year involvement with Thames Water which ended in 2017. Equity investors like QIC have now written their Thames Water stakes down to zero as the new Starmer Govt contemplates nationalisation of the business which is currently saddled with $24b in debt amid an ongoing political & media pile on. Are we exposed to that $24b debt & do we have any regrets about literally going back into the sewer in 2021 when we paid >$2b for equity control of Southern Water & committed to invest $4b over 4 years improving its assets. Could Shemara comment on the broader UK water scene, how our reputation is being impacted & whether we regret the Southern Water investment?

Answer: Chairman Glenn Stevens defended the record in UK water and then CEO Shemara gave an extensive response saying Southern Water was in much better shape than Thames Water. See video of question being asked and Shemara's extended responded via Twitter.

Q4. Big Four competitor ANZ is currently in a world of pain over alleged Federal bond market manipulation. Its CEO Shayne Elliott has today publicly apologised to the Federal Government's borrowing authority for the rorting. The ANZ board has commissioned a major investigation and multiple ANZ traders have been fired. When these sorts of scandals arise, competitor boards usually ask management: "What exactly has ANZ done wrong and is there any risk we could be accused of doing the same thing?" What is the answer to that question? Also, as a director of the NSW Government's borrowing authority TCorp, which is managing more than $150 billion of liabilities and bonds for NSW taxpayers, does Glenn Stevens believe there may also have been manipulation of bond trading in state debt as well as Federal debt? Could this become a systemic issue between government borrowers and Australia's Big Five banks?

Answer: Chairman Glenn Stevens deftly batted away the question saying Macquarie was clean and TCorp discussions were irrelevant. See video of exchange via Twitter.

Q5. The disgraced CFMEU is going into administration. It had monopoly union coverage over our new head office which was delivered by Lendlease. The chair noted today that this building was "one of Macquarie's largest balance sheet infrastructure undertakings to date." How much in Macquarie shareholder funds did we originally anticipate spending & what was the final figure? Did we pay 30% more due to CFMEU work practices as former ACCC chair Rod Sims estimated last week & are we confident organised crime figures were not able to work on the job? Given the work from home phenomenon that emerged during COVID, how many employees are we expecting to occupy the building & are we looking to sub-lease any space? Finally, could PwC auditor Voula Papageorgiou comment on whether the carrying value of this enormous investment was tested as at March 31 or whether that will only happen in the upcoming September 30 half year audit given that the building has only just reached final completion?

Answer: Chairman Glenn Stevens, the auditor and another executive all joined in to say everything was fine and it came in on budget and on time. None revealed the total spend or book value. See video of question being asked, the auditor's reassurance and final comments via Twitter.

Q6. After ISS recommended a vote against last year's rem report, we suffered a 19% protest vote, our 2nd biggest in history. Chair Glenn Stevens was very critical of ISS at last year's AGM. ISS recommended in favour this year. Did we change anything about our rem structures? Also, there was much discussion when Nick O'Kane was paid a record $57.6m last year & $120 million over a 3 year period. The CEO claimed at last year's AGM that Mr O'Kane could earn multiples of this elsewhere & then, lo & behold, he left a few months later & joined a Swiss energy trading house. How much did Mr O'Kane leave on the table by leaving & do his lapsed bonus shares get re-allocated to other employees or returned to shareholders? Finally, when buying $667m worth of ordinary shares in June to satisfy this year's MEREP bonus pool, how exactly does the process work where we paid a record $562m to current or former Macquarie staff who'd previously received bonus shares?

Answer: Chairman Glenn Stevens said they met ISS twice this year and they recommended in favour. He also said the Nick O'Kane bonus shares were "retained by the company". See video of exchange via Twitter.

Copyright © 2024 The Mayne Report. All rights reserved

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