1
00:00:03,640 --> 00:00:06,240
Speaker 1: Welcome to Ask Fear and Greed, where we answer questions

2
00:00:06,240 --> 00:00:10,000
Speaker 1: about business, investing, economics, politics and more. I'm Michael Thompson

3
00:00:10,039 --> 00:00:11,360
Speaker 1: and hello, Sean Aylmer.

4
00:00:11,520 --> 00:00:12,639
Speaker 2: Hi, Michael, Sean.

5
00:00:12,680 --> 00:00:15,320
Speaker 1: Today's question it's really a two part question and it

6
00:00:15,360 --> 00:00:18,680
Speaker 1: comes off the back of the news today around Macquarie

7
00:00:18,680 --> 00:00:24,560
Speaker 1: Bank and remuneration strikes for the bank. It's a two parter.

8
00:00:24,680 --> 00:00:29,080
Speaker 1: As I said, here's the first part, why are Mcquarie

9
00:00:29,200 --> 00:00:33,800
Speaker 1: bankers paid so much more than other bankers than say

10
00:00:34,320 --> 00:00:36,880
Speaker 1: Commonwealth Bank or nab rains Ed or take your pick. Really,

11
00:00:36,960 --> 00:00:38,800
Speaker 1: McQuary is right at the very top of the tree.

12
00:00:39,280 --> 00:00:41,600
Speaker 1: And then part two of this, which we'll get to

13
00:00:41,640 --> 00:00:45,720
Speaker 1: in a moment, is what does a remuneration strike mean

14
00:00:45,800 --> 00:00:48,040
Speaker 1: and how does that work? But let's start with kind

15
00:00:48,080 --> 00:00:50,240
Speaker 1: of why is there so much money at.

16
00:00:50,120 --> 00:00:55,120
Speaker 2: Macquarie right, Well, McQuary's always been we better be careful

17
00:00:55,320 --> 00:00:57,760
Speaker 2: here between Mcquarie Bank and Mcquarie Group.

18
00:00:57,920 --> 00:00:58,440
Speaker 1: Yeah.

19
00:00:58,480 --> 00:01:01,920
Speaker 2: So Mcquarie Group has always been known as a millionaires factory.

20
00:01:02,480 --> 00:01:05,559
Speaker 2: Now it has a bunch of businesses, one being a bank.

21
00:01:06,200 --> 00:01:10,880
Speaker 2: If you want to compare Mcquarie to Commonwealth Bank, National

22
00:01:10,880 --> 00:01:13,360
Speaker 2: Australia Bank, et cetera. You probably have to compare McQuary

23
00:01:13,400 --> 00:01:17,240
Speaker 2: Bank to Commonwealth Bank, National Australia Bank, et cetera. And

24
00:01:17,400 --> 00:01:19,399
Speaker 2: I'm not sure whether they get paid more or not

25
00:01:19,440 --> 00:01:23,319
Speaker 2: the guys in Mcquarie Bank or not. Mcquarie Group is

26
00:01:23,319 --> 00:01:26,039
Speaker 2: an investment bank, so you need to talk about comparing

27
00:01:26,040 --> 00:01:29,680
Speaker 2: them to UBS or Goldman Sachs or someone like that.

28
00:01:30,480 --> 00:01:35,039
Speaker 2: Do they get paid more maybe? I mean, I don't

29
00:01:35,120 --> 00:01:37,000
Speaker 2: actually know that. There's a bunch of reasons why they

30
00:01:37,080 --> 00:01:43,679
Speaker 2: might get paid more. Historically, Mcquarie has been the great

31
00:01:43,760 --> 00:01:47,320
Speaker 2: Australian investment bank. There were two, maybe thirty years ago,

32
00:01:47,360 --> 00:01:50,760
Speaker 2: there are two great investment banks in Australia BT and Mcquarie,

33
00:01:50,800 --> 00:01:54,279
Speaker 2: and they merged or McQuary effectively took over BT and

34
00:01:54,360 --> 00:01:57,440
Speaker 2: you ended up with Mcquarie and it. You know, it's

35
00:01:57,480 --> 00:02:01,120
Speaker 2: been very successful over many years, so that's a It

36
00:02:01,200 --> 00:02:03,680
Speaker 2: also has a workforce who, by reputation, work very hard

37
00:02:03,720 --> 00:02:06,040
Speaker 2: and very long, so they're more likely to get paid more.

38
00:02:06,480 --> 00:02:08,720
Speaker 2: But maybe the other investment banks do that as well.

39
00:02:09,760 --> 00:02:14,920
Speaker 2: Another reason, two thirds of Macquarie's income comes from overseas,

40
00:02:15,000 --> 00:02:17,680
Speaker 2: so you know, wind farms in South Korea are real

41
00:02:17,760 --> 00:02:21,120
Speaker 2: estate in Europe shipping container parks in Los Angeles, mobile

42
00:02:21,160 --> 00:02:25,040
Speaker 2: phone towers in Southeast Asia, hospitals in Spain. This is

43
00:02:25,080 --> 00:02:29,760
Speaker 2: a global bank, so it's looking for global talent and

44
00:02:29,800 --> 00:02:33,840
Speaker 2: so the pay rates it's talking about are for global people,

45
00:02:34,200 --> 00:02:37,400
Speaker 2: not necessarily Australian people. So at that top level they

46
00:02:37,440 --> 00:02:41,840
Speaker 2: do probably get paid more than everyone else in Australia,

47
00:02:41,880 --> 00:02:45,040
Speaker 2: at least because it is a global organization. There's also

48
00:02:45,040 --> 00:02:47,560
Speaker 2: got amazing longevity of staff at mcquarie. It's not a

49
00:02:47,600 --> 00:02:50,400
Speaker 2: company that with massive turnover. So if you actually have

50
00:02:50,400 --> 00:02:51,919
Speaker 2: staff that stay there for a long time, they get

51
00:02:51,919 --> 00:02:58,040
Speaker 2: paid more. Now. Shamara Remeni Yaka who last year took

52
00:02:58,080 --> 00:03:00,760
Speaker 2: a pay cut from twenty five billion to twenty four billion,

53
00:03:01,120 --> 00:03:01,560
Speaker 2: not much.

54
00:03:01,600 --> 00:03:04,000
Speaker 1: Shang on did you say million? Oh?

55
00:03:04,080 --> 00:03:06,320
Speaker 2: Sorry? Million? I meant I said billion.

56
00:03:06,600 --> 00:03:08,600
Speaker 1: That's about That would be nice, wouldn't it.

57
00:03:08,639 --> 00:03:11,359
Speaker 2: That would be nice. Yeah, so she's been twenty four minute.

58
00:03:11,320 --> 00:03:13,840
Speaker 2: I mean she has always been paid and her predecessor

59
00:03:13,880 --> 00:03:16,359
Speaker 2: always got paid huge amounts of money. There's a guy

60
00:03:16,360 --> 00:03:18,880
Speaker 2: that ring the commodity's desk hit one year there he

61
00:03:18,960 --> 00:03:23,320
Speaker 2: got paid thirty billion. I'm stuck on the billion thirty

62
00:03:23,560 --> 00:03:26,320
Speaker 2: million dollars. So there is no out they are really

63
00:03:26,440 --> 00:03:30,720
Speaker 2: high payers, but they're operating in global market. People have

64
00:03:30,760 --> 00:03:33,720
Speaker 2: been there for a long time, work very hard and

65
00:03:34,360 --> 00:03:36,920
Speaker 2: generally the second part of the question is going to

66
00:03:36,920 --> 00:03:41,160
Speaker 2: address is generally people are paid bonuses which are attached

67
00:03:41,160 --> 00:03:42,840
Speaker 2: to success or otherwise.

68
00:03:43,760 --> 00:03:46,120
Speaker 1: Okay, well, let's move into that second part of the

69
00:03:46,200 --> 00:03:49,960
Speaker 1: question then, because it was about the remuneration report and

70
00:03:50,000 --> 00:03:55,080
Speaker 1: the first strike against Macquarie's remuneration report at it AGM,

71
00:03:55,600 --> 00:03:58,320
Speaker 1: how does this work? What is that a reflection on

72
00:03:58,720 --> 00:04:01,160
Speaker 1: and where does where do they go from here to

73
00:04:01,240 --> 00:04:02,320
Speaker 1: avoid a second strike?

74
00:04:03,080 --> 00:04:07,440
Speaker 2: So, a first strike occurs when twenty five percent of

75
00:04:07,440 --> 00:04:14,000
Speaker 2: shareholders vote against in this case, it was the remuneration report. Now,

76
00:04:14,480 --> 00:04:16,159
Speaker 2: the reason that happened is that a couple of the

77
00:04:16,160 --> 00:04:21,160
Speaker 2: proxy firms suggested that people vote against it. The reason

78
00:04:21,240 --> 00:04:24,200
Speaker 2: they didn't like it wasn't so much, well, it wasn't

79
00:04:24,200 --> 00:04:25,960
Speaker 2: they getting paid that my people are getting paid that

80
00:04:26,040 --> 00:04:28,280
Speaker 2: much money. But it's more there've been all sorts of

81
00:04:28,320 --> 00:04:32,880
Speaker 2: compliance issues at Macquarie, and that means that they haven't

82
00:04:32,880 --> 00:04:35,640
Speaker 2: been as successful as they should have been in the

83
00:04:35,720 --> 00:04:38,280
Speaker 2: views of the proxy firms, and so they should be

84
00:04:38,360 --> 00:04:40,839
Speaker 2: panealized for that. And they weren't penalized for that enough,

85
00:04:41,200 --> 00:04:43,880
Speaker 2: as they said, Shamara rameny yakudn't from twenty five million

86
00:04:43,920 --> 00:04:46,480
Speaker 2: to twenty four million, there's only four percent drop. That's

87
00:04:46,520 --> 00:04:51,039
Speaker 2: not much, actually, and that's what the proxy advisors don't like,

88
00:04:51,680 --> 00:04:54,880
Speaker 2: so they recommended. So a bunch of shareholders, big shareholders

89
00:04:54,920 --> 00:04:57,239
Speaker 2: voted against it. More than twenty five percent voted against

90
00:04:57,279 --> 00:05:00,680
Speaker 2: remuneration report. They call that a first strike. It kind

91
00:05:00,760 --> 00:05:03,880
Speaker 2: of it's more of a reputation issue, a pr issue,

92
00:05:03,920 --> 00:05:07,440
Speaker 2: than anything else. If you get a second strike next year,

93
00:05:08,680 --> 00:05:12,560
Speaker 2: then what happens is that the board has to be spilled.

94
00:05:12,960 --> 00:05:15,600
Speaker 2: Under law, now the board can be spilled and they

95
00:05:15,600 --> 00:05:19,360
Speaker 2: can be revaded in and no big company has ever

96
00:05:19,400 --> 00:05:22,800
Speaker 2: had that happen, you know, companies like Quantus had a

97
00:05:22,800 --> 00:05:25,800
Speaker 2: board spill at eighty against the remuneration report a couple

98
00:05:25,839 --> 00:05:28,400
Speaker 2: of years ago and the following year. I don't think

99
00:05:28,400 --> 00:05:31,359
Speaker 2: they've got a second strike though, So you need two

100
00:05:31,400 --> 00:05:34,720
Speaker 2: strikes for something to happen, and then it's a spill,

101
00:05:35,160 --> 00:05:38,440
Speaker 2: and then probably the director's are re elected anyway, but

102
00:05:38,480 --> 00:05:40,600
Speaker 2: it's more of a reputation issue.

103
00:05:40,240 --> 00:05:42,640
Speaker 1: Sure, And I was reading some of the analysis around

104
00:05:42,640 --> 00:05:45,000
Speaker 1: this in the last twenty four hours and about one

105
00:05:45,000 --> 00:05:47,599
Speaker 1: of the arguments why there shouldn't be this strike against

106
00:05:47,640 --> 00:05:51,000
Speaker 1: it and more restrictions put in place around the remuneration

107
00:05:51,200 --> 00:05:56,640
Speaker 1: is that the potential for that high remuneration at Macquarie

108
00:05:56,640 --> 00:05:59,919
Speaker 1: as part of what makes Macquarie and attracts the best

109
00:06:00,080 --> 00:06:03,000
Speaker 1: talent and keeps people led not just as you say,

110
00:06:03,040 --> 00:06:06,000
Speaker 1: for a little while, but for almost their entire career

111
00:06:06,040 --> 00:06:08,560
Speaker 1: in many cases, and that putting too many restrictions on

112
00:06:08,600 --> 00:06:12,520
Speaker 1: that and damaging that reputation would actually have a significant

113
00:06:12,520 --> 00:06:14,840
Speaker 1: impact on the on the group overall.

114
00:06:15,800 --> 00:06:18,200
Speaker 2: Yeah, I totally agree. Mcquarie is full of I mean,

115
00:06:18,200 --> 00:06:21,520
Speaker 2: I've done some work in another business for Mcquarie, full

116
00:06:21,560 --> 00:06:25,039
Speaker 2: of very smart, good people, and many of them have

117
00:06:25,200 --> 00:06:28,279
Speaker 2: been there for a long long time. And you know,

118
00:06:28,480 --> 00:06:30,440
Speaker 2: how do you judge your company and what they're like

119
00:06:30,480 --> 00:06:34,080
Speaker 2: as an employer. Obviously money comes into it, but it's

120
00:06:34,120 --> 00:06:37,200
Speaker 2: got to be more than that, and Mcquarie has fantastic longevity.

121
00:06:37,400 --> 00:06:39,279
Speaker 2: So there's something going right there. Yeah.

122
00:06:39,360 --> 00:06:43,039
Speaker 1: Okay, interesting topic and well answered for a TEA. Part

123
00:06:43,040 --> 00:06:44,440
Speaker 1: of that actually kind of became a bit of a

124
00:06:44,480 --> 00:06:47,880
Speaker 1: three part as well. It's the flexibility and freedom of

125
00:06:47,880 --> 00:06:50,760
Speaker 1: this show that we can just add more parts into

126
00:06:50,800 --> 00:06:54,440
Speaker 1: any question at all. Thank you very much, Sean, Thanks Michael,

127
00:06:54,520 --> 00:06:56,479
Speaker 1: And if you've got your own one or two or

128
00:06:56,480 --> 00:06:58,919
Speaker 1: three parts or more part question, then please send it

129
00:06:58,960 --> 00:07:02,279
Speaker 1: on through via the website Fearangreed dot com dot au

130
00:07:02,480 --> 00:07:04,920
Speaker 1: or any of the social media platforms. Are Michael Thompson

131
00:07:04,960 --> 00:07:06,160
Speaker 1: and this is ask Fear and Greed