Westpac (WBC) 2015 AGM Report

Company/ASX Code : Westpac Banking Corporation (WBC)
Venue :
10am Sofitel Sydney Wentworth
61-101 Phillip Street,
Sydney, New South Wales
Monitor : Ms Carol Limmer
AGM Details / NoM : Friday 11th December, 2015
# of Attendees : Approximately 600
# Holdings represented by ASA : 2,202
Value of Proxies : $372 million
# Shares Represented by ASA : 12 million
Market Capitalisation : $97 billion

16% vote against remuneration report

The meeting (which went for about 2 and a half hours) was very well handled by the Chairman who gave everyone wishing to raise matters the opportunity to do so.

Chairman, Lindsay Maxsted, and CEO, Brian Hartzer, both gave comprehensive presentations which can be viewed on the WBC website. Briefly, they covered the financial performance (which was a solid one), capital position, recent capital raising, the new CEO, new organisational structure, Board renewal, refreshment of strategy, their response to a raft of regulatory and industry changes and progress on digitally transforming the business.  To bring their service led strategy to life WBC has created a program called the ‘Service Revolution’ which is comprised of 5 priorities (performance discipline, service leadership, digital transformation, targeted growth and workforce revolution) and a series of related projects.

For banking, WBC is expecting broadly similar credit growth for the system to that achieved in 2015 although the composition is expected to be a little different, with improved business lending and an easing in housing growth. Whilst housing has continued to be a hot topic, with price rises in some markets leading to suggestions that we are in the midst of a bubble, Westpac doesn’t share that view. Whilst house and apartment prices have risen sharply in some suburbs, they believe the economics of Australian housing are sound. Essentially, WBC think that the organisation is sustainable for the long term.

It was mentioned that WBC fully supported the objectives of the UN Conference in Paris on climate change. They are committed to operating, both directly and indirectly, in a manner consistent with supporting an economy that limits global warming to less than 2 degrees.

WBC received a number of questions from shareholders prior to the meeting. These had been categorised under 5 headings and specifically addressed upfront by the Chairman.

A range of questions were asked at the meeting, including from ASA representative, on topics such as gearing, climate change, mining on indigenous lands, the proposed Adani Mine, capital position and impact on ROE, dividends (WBC’s aim to steadily increase them with franking credits but the strength of balance sheet comes first then dividends), extent of fraud, unethical behaviour amongst Banks, managing credit risk, their Asian strategy, potential of new niche competitors using technology to take business, lending for apartments being sold off plan and residential properties in mining areas, explanation of difference between CEO and COO and executive remuneration WBC will consider market value rather than ‘fair value’ for LTI allocations next year. These were well answered by the Chairman with occasional assistance from the CEO.

Whilst there were a few negative comments there were also a range of complimentary comments from the floor.

In relation to proposed election/re-election, Ms Bryan, Messrs Hawkins and Dunn all spoke with relevance as to current and future contributions to the Board.

ASA was in favour of all resolutions which were subject to poll.  With exception of the Remuneration Report, all were passed with over 94% in favour. The Remuneration Report drew an over 16% vote against. Just prior to and just after the AGM there was further media coverage of the accounting treatment of software write downs and potential impact on executive pay (LTIs). There was also discussion on this at the meeting with the Chairman specifically addressing it and putting the WBC view forward. As mentioned in Voting Intentions, in addition to the capitalised software write down ($354m) there were other one offs viz partial sell down of BT Investment Management ($665m) and some Lloyds tax adjustments ($64m), which were also excluded from the earnings. All up, these 3 adjustments were $375m net positive.