Macquarie Group has been stung by a shareholder backlash against its executive pay plans amid disquiet over a string of regulatory prosecutions.
Investors lodged votes against Macquarie’s remuneration plans in excess of 25%, in a major rebuke of the company’s famed pay packages, triggering a “first strike” at its annual general meeting in Sydney on Thursday.
A remuneration report requires a 25% opposing vote to trigger a strike, as opposed to the usual majority required for ordinary resolutions. Under rules designed to hold directors accountable for executive pay, shareholders will get a chance to spill the board next year if they deliver another strike.
The Macquarie chair, Glenn Stevens, said at the AGM that a number of shareholders had expressed a view that the board had not adequately reflected “risk shortcomings”.
“The board hears your message and will reflect carefully on addressing those concerns,” Stevens said.
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In May, the chair of the Australian Securities and Investments Commission, Joe Longo, issued a stinging critique of Macquarie after announcing the fourth regulatory action against the company in just over 12 months.
Longo said at the time Asic had “ongoing and deep concerns” with Macquarie over its “weak remediation of longstanding issues”.
Asic alleged in May that Macquarie’s securities business engaged in misleading conduct by misreporting millions of short sales to the market operator for more than 14 years.
Short sales refer to investors taking a position on an asset they expect to fall in value.
Macquarie said it had remedied those issues, implemented additional controls and was reviewing the regulator’s claim. The company could not comment further on Thursday given it is a live legal matter.
Macquarie is well-known for its huge pay packets, which are tightly linked to company profits.
The Macquarie chief executive, Shemara Wikramanayake, earned $24m during the last 12-month reporting period, mostly consisting of bonuses, making her one of Australia’s highest paid executives.
While shareholders usually lodge a protest vote against executive pay when a company is performing poorly, there are times investors use it to tell the board they are unhappy about other issues.
Woolworths received a remuneration strike in 2023 after shareholders over concerns with the supermarket’s response to the death of two workers, one of whom was killed after being hit by pallets at a distribution centre.
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Climate concerns
Macquarie also faced a climate-focused shareholder resolution calling on the company to outline how its financing for fossil fuel projects aligned with its net zero commitments.
The resolution, which did not receive majority support, asked the bank to disclose its exposure to fossil fuel companies and its plans for financing them.
Activists are particularly unhappy with Macquarie’s support for the planned large gas fracking project in the Northern Territory’s Beetaloo basin.
“The reality is that Macquarie’s fossil fuel financing activity is categorically not aligned with its climate commitments,” Kyle Robertson, an analyst at the climate activist group Market Forces, told the AGM.
While many financiers have climate policies, they often allow for the development of new fossil fuel reserves, rubbing against analysis showing emissions from existing fossil fuel infrastructure are more than enough to push the world beyond its climate goals.
Stevens said the company’s position was in line with the policies of the federal government, which allows for the expansion of gas production during the transition to renewable energy.
“That is part of the transition; Macquarie is involved in that,” Stevens said.