Extracts from the Macquarie Bank Limited 2012 Annual Report PDF
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MACQUARIE BANK 2012 ANNUAL REPORT MACQUARIE BANK LIMITED ACN 008 583 542 Macquarie Bank Limited and its subsidiaries 2012 Annual Report macquarie.com.au Directors’ Report for the financial year ended 31 March 2012 In accordance with a resolution of the Voting Directors (the Directors) of Macquarie Bank Limited (MBL, Macquarie Bank, Company), the Directors submit herewith the income statements and statements of cash flows for the year ended 31 March 2012 and the statements of financial position as at 31 March 2012 of the Company and its subsidiaries (the Consolidated Entity) at the end of, and during, the financial year ended on that date and report as follows: Directors At the date of this report, the Directors of Macquarie Bank are: Independent Directors H.K. McCann, AM, Chairman D.J. Grady, AM1 M.J. Hawker, AM P.M. Kirby C.B. Livingstone, AO J.R. Niland, AC H.M. Nugent, AO P.H. Warne Executive Directors G.C. Ward, Managing Director and Chief Executive Officer2 N.W. Moore Other than Ms Grady and Mr Ward, the Voting Directors listed above each held office as a Director of Macquarie Bank throughout the financial year ended 31 March 2012. Those Directors listed as Independent Directors have been independent throughout the period of their appointment. Mr W.R. Sheppard was the Managing Director and Chief Executive Officer of Macquarie Bank from the beginning of the financial year until his resignation which was effective on 20 December 2011. Details of the qualifications, experience and special responsibilities of the Directors and qualifications and experience of the Company Secretaries at the date of this report are set out in Schedule 1 at the end of this report. 1 Ms Grady joined the Board on 19 May 2011. 2 Mr Ward joined the Board on 20 December 2011. 2 2 Meeting Attendance Directors’ meetings The number of meetings of the Board of Directors (the Board) and meetings of Committees of the Board, and the number of meetings attended by each of the Directors of Macquarie during the financial year is summarised in the tables below: Board meetings Monthly Board meetings Special Board meetings (11) (1) Eligible to attend as Eligible to attend as a member Attended a member Attended H.K. McCann 11 11 1 1 G.C. Ward1 3 3 – – N.W. Moore 11 11 1 1 D.J. Grady2 10 10 1 1 M.J. Hawker 11 11 1 1 P.M. Kirby 11 11 1 1 C.B. Livingstone 11 11 1 1 J.R. Niland 11 11 1 1 H. M. Nugent 11 11 1 1 W.R. Sheppard3 8 8 1 1 P.H. Warne 11 11 1 1 Board Committee meetings Board Audit Committee meetings (8)a Eligible to attend as a member Attended H.K. McCann4 1 1 M.J. Hawker5 7 7 P.M. Kirby 8 8 C.B. Livingstone 8 8 P.H. Warne 8 8 a The Macquarie Board Audit Committee (BAC) is a joint committee of Macquarie Group Limited (Macquarie) and Macquarie Bank. The Macquarie BAC assists the Boards of Voting Directors of Macquarie and Macquarie Bank in fulfilling the responsibility for oversight of the quality and integrity of the accounting and financial reporting practices of Macquarie Group. There were two Board Sub-Committee meetings. The first meeting was attended by all of its members, being Mr McCann, Mr Ward, Mr Moore, Mr Sheppard and Mr Warne. The second meeting was attended by all of its members, being Mr McCann, Mr Moore, Ms Livingstone, Mr Sheppard and Mr Ward. The Chairman generally attends all meetings of the Board Audit Committee even though not a member of that committee. All Board members are sent BAC meeting agendas and may attend any BAC meeting. 1 Mr Ward was appointed to the Board as an Executive Voting Director effective on 20 December 2011. 2 Ms Grady was appointed to the Board as an Independent Voting Director effective on 19 May 2011. 3 Mr Sheppard ceased to be an Executive Voting Director on 20 December 2011. 4 Mr McCann ceased to be a member of the Board Audit Committee effective 1 June 2011. 5 Mr Hawker joined the Board Audit Committee on 1 June 2011. 3 Macquarie Bank Limited and its subsidiaries 2012 Annual Report macquarie.com.au Directors’ Report for the financial year ended 31 March 2012 continued Principal activities The principal activity of the Consolidated Entity during the financial year ended 31 March 2012 was to act as a full service financial services provider offering a range of commercial banking and retail financial services in Australia and selected financial services offshore. The Bank is a subsidiary of Macquarie Group Limited and is regulated by the Australian Prudential Regulation Authority (APRA) as an authorised deposit-taking institution (ADI). In the opinion of the Voting Directors, there were no significant changes to the principal activities of the Consolidated Entity during the financial year under review not otherwise disclosed in this report. Result The financial report for the financial years ended 31 March 2012 and 31 March 2011, and the results herein, have been prepared in accordance with Australian Accounting Standards. The consolidated profit after income tax attributable to ordinary equity holders for the financial year ended 31 March 2012 was $A609 million (2011: $A803 million). Dividends and distributions MBL paid dividends and paid or provided distributions during the financial year as set out in the table below: Payment Payment In respect of financial Security date type $A year ended/period Ordinary shares 4 July 2011 Final Dividend 296,800,000 31 March 2011 Paid 14 December 2011 Interim Dividend 194,000,000 31 March 2012 Paid Macquarie Income 15 April 2011 Periodic 6,578,630 15 January 2011 to Paid Securities1 14 April 2011 15 July 2011 Periodic 6,601,863 15 April 2011 to Paid 14 July 2011 17 October 2011 Periodic 6,755,068 15 July 2011 to Paid 14 October 2011 16 January 2012 Periodic 6,513,095 15 October 2011 to Paid 14 January 2012 16 April 2012 Periodic 5,138,958 15 January 2012 to Provided 31 March 2012 Macquarie Income 15 April 2011 Periodic 2,084,601 16 October 2010 to Paid Preferred 15 April 2011 Securities2 17 October 2011 Periodic 2,014,320 16 April 2011 to Paid 17 October 2011 16 April 2012 Periodic 1,816,453 18 October 2011 to Provided 31 March 2012 1 Macquarie Income Securities (MIS) are stapled securities comprising an interest in a note, being an unsecured debt obligation of Macquarie Finance Limited (MFL), issued to a trustee on behalf of the holders of the MIS (MFL note), and a preference share in Macquarie Bank. The MIS are quoted on the Australian Securities Exchange (ASX). The MIS distributions set out above represent payments made, or to be made, by MFL to MIS holders, in respect of the MFL note component of the MIS. The payments are not dividends or distributions paid or provided by Macquarie Bank to its members. The MIS are classified as equity under Australian Accounting Standards – see notes 30 and 31 to the financial report for further information on the MIS and MIS distributions. 2 Macquarie Income Preferred Securities (MIPS) are limited partnership interests in Macquarie Capital Funding LP (Partnership), a partnership established in Jersey as a limited partnership, which are traded on the Luxembourg Stock Exchange. In certain circumstances, preference shares issued by Macquarie Bank and held by the general partner of the Partnership may be substituted for the MIPS. The assets of the Partnership include convertible debentures issued by Macquarie Bank (acting through its London Branch) which are listed on the Channel Islands Stock Exchange. The MIPS distributions set out above represent payments made, or to be made, by the Partnership to the MIPS holders. The payments are not dividends or distributions paid or provided by MBL to its members. The MIPS are classified as equity under Australian Accounting Standards – see notes 30 and 31 to the financial report for further information on the MIPS and MIPS distributions. No other dividends or distributions were declared or paid during the financial year. State of affairs There were no other significant changes in the state of the affairs of the Consolidated Entity that occurred during the financial year under review not otherwise disclosed in this report. 4 Macquarie Bank Limited and its subsidiaries 2012 Annual Report macquarie.com.au Directors’ Report – Remuneration Report for the financial year ended 31 March 2012 Contents Introduction .................................................................................................................................................................................. 7 1 Macquarie’s remuneration approach is designed to achieve an appropriate balance between risk and return that aligns the interest of staff and shareholders ............................................................................................... 8 1.1 Macquarie’s remuneration framework remains the same overall ................................................................................. 8 1.2 Risk is incorporated into the remuneration process ..................................................................................................... 8 1.3 Macquarie’s remuneration system is structured to balance risk and return ................................................................ 9 1.3.1 Key features of the remuneration system ........................................................................................................ 10 1.3.2 Investment of retained profit share.................................................................................................................. 11 1.3.3 Forfeiture of retained unvested profit share whilst employed – Malus ..........................................................