6 questions asked at 2024 Cochlear hybrid AGM
November 6, 2024
Below is the text of the 6 written questions submitted at the 95 minute Cochlear hybrid AGM held in Sydney on October 25, 2024. No early disclosure of the proxies or material protest votes.
Q1. In April 2020, Glen Boreham was one of the Cochlear directors who treated retail shareholders poorly in a capital raising, by supporting a discounted $880m institutional placement at $140 a share, followed by a $50m SPP for retail shareholders which was patently too small. $300m 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 $220m after receiving $417m worth of applications from 16,651 retail shareholders. It refunded $197m and used a scale back formula favouring wealthier retail shareholders, which included the directors. Given this disappointing history, could Glen and the chair commit to using the fairer PAITREO structure that treats all shareholders equally, in future capital raisings. At last year's AGM after I raised this issue, the chair read from a script claiming the raising saved the company and no retail shareholder was diluted. Will she now admit that 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. Does she now acknowledge they were diluted without compensation?
Answer: The chair Alison Deans stuck with the company line and still can't bring herself to express any regrets. Watch video of question being asked, plus this lacklustre response from the chair.
Q2. Best practice is now to disclose the proxy position to the ASX along with the formal addresses to offer more timely disclosure to the market? The likes of Suncorp, Origin Energy, NAB, Car Group, Viva Energy, Webjet, Xero, Myer, Brambles and JB Hi Fi all do this. Could Christine McLoughlin comment on why she did this at the Suncorp AGM earlier this week, but she wasn't able to persuade this board to do the same today? Will the chair agree to adopt this practice at next year's AGM? If worried about impacting the debate in the room you can always delay putting up the proxies slide for those in attendance, whilst disclosing it to the market in the slide pack.
Answer: After this answer from chair Alison Deans, reckon they might move on this one next year. Watch video of exchange via Twitter.
Q3. 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 this remuneration report item? If so, what reasons did they give? Please don't say they are confidential. It is standard for companies to be across this detail on the voting recommendations and inform shareholders where relevant.
Answer: The chair said all 5 supported all resolutions, which doesn't explain the nearly 6% protest votes against her and and fellow long serving director Glen Boreham. Reckon that might go back to the dodgy 2020 capital raising. Watch video of exchange via Twitter.
Q4. Could new director Caroline Clarke and the chair comment on the recruitment process that led to her appointment to the board. Was a head hunter involved, did the full board interview Caroline and did they interview any other candidates? Did Caroline know any of our directors before engaging with the recruitment process?
Answer: The chair said it was competitive and no one knew Caroline before her engagement with the process, which is good. Watch video of exchange via Twitter.
Q5. 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 BHP, Brickworks, Fortescue, Harvey Norman, Origin Energy, Premier Investments, Ramsay Healthcare, Seven Group, Soul Pattinson, Whitehaven Coal and Worley all banned online questions and voting in 2024, so well done for showing them up. What was the experience like from your end?
Answer: The chair complained about the extra cost and complexity from running a hybrid but they'll hopefully stick with it. Watch video of exchange via Twitter.
Q6. A transparency request for the chair, Alison Deans. The annual report says that we have 41,735 shareholders but less than 2% of them will have voted today. Politicians wouldn't tolerate a 98% no show in elections, so why do we? One way of tackling chronically low retail shareholder voting rates is to disclose how many shareholders actually voted for and against each item of business, like with a scheme of arrangement. Tabcorp and Suncorp did it this week, as your board colleague Christine McLoughlin would attest. Even the ASX itself and governance laggard Qantas embraced this practice last year. You have the data on how many of us voted, so why not disclose it to the market with the poll results, if only to provide some public ventilation of retail shareholder sentiment. This would in turn stimulate higher participation rates in future as retail shareholders won't feel powerless and swamped by end of town investors who dominate corporate voting in Australia, making retail voting pointless.
Answer: The acting chair Christine McLoughlin said it is up to each company, which is self-evident. No insight as to why Suncorp and Cochlear are different when she serves on both boards. Watch video of exchange via Twitter.
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