It’s never a good sign when 25% or more shareholders inflict what’s regarded as a ‘first strike’ on the board of a listed company. What a first strike effectively does is put a board on notice that unless it addresses fundamental shortcomings, it could receive a second strike.
If you’re new to the ‘two-strikes’ law here’s the skinny on how and why it works.
The two-strike law
Firstly, a remuneration report requires a 25% opposing vote to trigger a strike.
When a ‘second strike’ occurs, shareholders will vote at the company’s AGM to determine if all the directors will need to stand for re-election.
If this ‘spill’ resolution passes with 50% or more eligible votes cast, then a ‘spill meeting’ will take place within 90 days.
During that spill meeting those individuals who were directors when the directors’ report was considered - at the most recent AGM - will be required to stand for re-election.
Good luck with that.
What the ‘two-strikes’ law is basically designed to do is hold directors accountable for executive salaries and bonuses.
While second strikes on boards are rare, Macquarie Group (ASX: MQG) may receive the rarified air dished out to Platinum Asset Management (ASX: PPT) late last year company when shareholders inflicted a second-strike blow on the badly underperforming fund manager.
While Platinum shareholders chose not to vote in favour of spilling the board – despite 72% voting in against the remuneration report – Macquarie board may not to be so lucky.
By comparison, in 2023 Woolworths (ASX: WOW) received a remuneration strike following shareholder concerns about the supermarket operator’s response to the death of two workers.
Why Macquarie shareholders are angry
Last Thursday Macquarie Group suffered its first-ever strike on the remuneration report Macquarie Group with 25.4% of shareholders venting their angst.
Shareholder dissatisfaction with the Macquarie Group board and its management team straddles both recent company performance and questionable business practices.
Macquarie also faced a climate-focused resolution calling on the company to outline how its financing for fossil fuel projects aligns with its net zero commitments.
The one-time ASX darling used to be referred to as the ‘millionaire factory’ due to the ability of former CEO Allan Moss to take what was a small Australian merchant bank and transform it into a global behemoth.
For years the spoils were shared by shareholders and employees alike – many of the latter literally became millionaires – and for many years the company could do no wrong.
However, fast forward to 2025 and the ‘millionaire factory’ moniker now stands as a cynical reminder to shareholders that the glory days of the $86 billion finance giant are now well behind it.
This is reflected is the 10%-plus drop in the share price since trading at $236.67 late January.
Recent share price dips also reflect concerns over the stock’s earnings and deal-making activity.
Specifically, the company's commodities trading division has seen reduced contributions due to a return to more muted trading conditions, and asset sales have been slower than anticipated.
Why are we filling execs boots?
In light of disappointing results, shareholders are clearly miffed at why the company’s executives expect to be paid like the high-flyers they’re clearly not.
While Macquarie has had a long history of issuing mouthwatering payouts to it execs, they have until recently been tightly linked to profitability.
According to the 2025 remuneration report, Macquarie Group managing director and CEO Shemara Wikramanayake would take home in excess of $24 million in FY25. This includes a fixed remuneration of $1.5 million and a juicy $15.8 million of retained profit share.
By comparison, Ben Way, the head of Macquarie Asset Management (MAM), stood to receive $12.7 million in total.
Then there’s head of Macquarie Capital, Michael J Silverton who has a pay packet of $11.7 million.
However, there’s more to shareholder dissatisfaction than financial performance alone.
The group also has some serious compliance issues to face.
In a blistering critique of Macquarie Group in May, the chair of ASIC Joe Longo, told the market that ASIC had “ongoing and deep concerns” about Macquarie over its “weak remediation of longstanding issues.”
While the group is no stranger to intense regulator scrutiny, ASIC is currently suing Macquarie Securities - the company's broking arm - for repeated and systemic misleading conduct in its short-sale reporting to the market operator, allegedly misreporting millions of trades for 14 years.
But that’s not all, there are other actions that relate to Macquarie Bank's "multiple and significant compliance failures".
These issue relate specifically to its futures-dealing business and over-the-counter derivatives trade reporting.
Mea culpa
In what was tantamount to some sort of contrition, Macquarie Group chair Glenn Stevens told shareholders that senior leaders are aware of the company's compliance failures and how the "risk shortcomings" are not adequately addressed in the remuneration report.
"Where shortcomings are identified, the board holds staff accountable, seeks to incentivise future improvement and reflects on what the issue might tell us about the organisation's culture," the former Reserve Bank governor noted.
"This was the approach adopted in response to the licence conditions imposed earlier this year by ASIC on Macquarie Bank. There were remuneration impacts for several executive committee members and others, and these impacts also incorporated incentives for all senior executives to resolve the issues."
"So far as remuneration impacts are concerned, this will be an FY26 matter, about which the board will come to a view over the period ahead," Stevens also said.
"I also acknowledge that, while Macquarie's remuneration system is strongly supported by shareholders, a number of shareholders have the view that the board has not adequately reflected risk shortcomings in our FY25 decisions."
Meanwhile, Steven’s also managed to raise a few eyebrows at this defence of the company’s prized $75 million a year audit contract at Thursday’s eventful AGM.
What triggered suggested conflicts are the former links the board’s chair of audit Michelle Hinchliffe has to KPMG – one of the contract bidders - who retired from the firm in 2022 after 37 years.
Down but not out
In a June-quarter performance update, the group made a profit of $3.7 billion, up 5% year on year.
Management tried to put a brave face on the result, boasting it's had "56 years on unbroken profitability.
However, the market was having none of it and in the face of myriad issues, plus a weak trading update, sold the stock off from $226.37 23 July to as low as $213.36 five days later.
Macquarie Asset Management’s (MAM) net profit contribution was down due to the timing of investment-related income from asset realisations, partially offset by an increase in performance fees.
MAM had $945.8 billion in assets under management (AUM) as of June 30. The private markets business had $389 billion in AUM; it raised $3.5 billion in new equity in the three months.
During the period, Macquarie Group agreed to divest its North American and European public investment businesses to Nomura, however, it retained the public investment business in Australia.
The transaction is expected to close by the end of 2025.
Added to the issues facing Macquarie on many fronts, chief financial officer Alex Harvey threw another bombshell into the melee with revelations that he was retiring.
Harvey’s decision to call it quits has heightened speculation that Wikramanayake may also be looking for an off-ramp in the next 12 to 18 months.
Macquarie Group has a market cap of $82.2 billion; the share price is up 5.46% in one year and down 5% in the last week.
The stock’s shares appear to be in a near-term uptrend confirmed by its 20-day moving average.
Consensus is moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.