Annual

Report

2022

Macquarie Bank Limited

ACN 008 583 542

Macquarie Bank

Year ended 31 March 2022









Macquarie Bank Limited is a subsidiary of Macquarie Group Limited

ACN 112 169 279 and is regulated by the Australian Prudential

Regulation Authority (APRA) as an authorised deposit-taking

institution (ADI). Macquarie Group Limited is regulated by APRA

  

Cover image

  

specialised electric car-buying service to help Australians wanting

to make the transition to an electric vehicle, launched as part

  



  

03 04

Financial Report

Financial statements

Income statements 67

Statements of comprehensive income 68

  

Statements of changes in equity 70

 

 

Statutory statements

Directors’ declaration 206

Independent auditor’s report 207

Further Information

Additional investor information 214

Glossary 218

Contents

01 02

About

Letter from the Managing Director

 

 

  

Directors’ Report

Directors’ Report 22

Directors’ experience and

   

Remuneration Report 35

About

The Home of Good Borrowers



campaign In November 2020, we have continued

to generate awareness about how we reward

 

 

  

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout







 

 

 

 

pandemic, Macquarie Bank (MBL) provided continued access



   



clients remained on some form of pandemic assistance, down from

 

has prompted for some clients, giving rise to near and longer-term

changes in our approach to meeting their needs and ensuring their



While clients have proven resilient to the uncertainty of the last two

years, new challenges have emerged in recent months, whether in

the form of geopolitical impacts on global markets or the continued

 

in the period ahead. MBL’s approach in this environment involves

continued engagement and monitoring across our portfolios for

impacted clients so that we can provide tailored support and

solutions as and when required.

 

ordinary equity holder of $A2,717 million for the year ended

 



platform and total BFS deposits together with releases in net credit

  

investment and higher average headcount to support business

growth and regulatory requirements.

Underpinning

this strong result

are longstanding

fundamentals that

have positioned MBL

well to support our

clients and other

stakeholders.”

Letter from the

Managing Director

and CEO

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

Commodities and Global Markets (CGM) saw increased revenue

from Commodities with strong risk management demand driven

by increased client hedging activity and trading activity as a

result of elevated volatility and commodity price movements. The

contribution from Commodities inventory management and trading

was also up while Financial Markets continued to deliver strong

performance. The contribution from Asset Finance also increased,

largely related to the partial sale of the UK Meters portfolio and

increased activity across its other sectors.

Underpinning this strong result are longstanding fundamentals

that have positioned MBL well to support our clients and other

stakeholders. These fundamentals include the diversity of our

business mix, strong capitalisation, a well-funded balance sheet

 

forward, these same strengths position us well to adapt to ongoing

changes in market conditions.

After over 20 years with Macquarie, most recently as Macquarie

Group (MGL) Treasurer, I was privileged to be appointed as

 

retired after 22 years with Macquarie. I would like to record my

thanks to Mary, for her support to me through a lengthy handover

 

many years, serving in a range of investment banking and risk



 

Alongside my support for Macquarie Bank’s businesses and clients,



initiatives to strengthen the voice of the Bank within the Macquarie

Group and enhance MBL’s governance, culture and structure to

ensure full and ongoing compliance with prudential standards and

 

As previously noted, we have been working with APRA to create a

comprehensive remediation plan, and have made good progress

in recent months including detailed programs of work across

governance, remuneration, risk culture, regulatory reporting,

prudential risk management, and group structure.

The plan was approved and endorsed by the MBL Board in FY2022.

I’m pleased to note that the changes proposed under the plan,

on which we will continue to deliver through FY2023 and beyond,

will have a positive impact on MBL through improved systems,

frameworks and processes, and further strengthen our risk culture.

 



the MBL Board. Consistent with similar structures in other markets

where a banking entity sits within a broader group structure, the

changes introduce additional safeguards to better protect the

interests of MBL within the Group.

After these appointments, the MBL Board will comprise the MGL

non-executive directors, Shemara Wikramanayake, Stuart Green



 

 Ian Saines as

  Ian

is an experienced leader in commercial and investment banking and

asset management, having held senior roles at Commonwealth Bank

of Australia, Challenger, Zurich Financial Services and Bankers Trust

Australia. Ian began his career at the Reserve Bank of Australia and



environments combined with audit, risk and investment committee

   

due course.

The delivery of MBL’s FY2022 record result marks the retirement

of Peter Warne, who has chaired the MBL Board for the last six



commitment and engagement as Chair and as a board member

over many years. Peter has overseen a period of strong progress

for Macquarie, including successful management transition of both

  

recent challenges. I look forward to working with Glenn Stevens as



considerable markets and economics experience, most notably after

a decade as Governor of the Reserve Bank of Australia.



commitment to our clients and communities through FY2022.

  

and at times while working from home through lockdowns. As we

move beyond the pandemic, I’m pleased to see so many members

 

 

approach to hybrid working.

Stuart Green



Sydney

6 May 2022



 

$A2,717m

 62 

FY2022 net operating income

$A9,554m

 37 

FY2022 operating expenses

$A5,887m

 25 

BFS Australian clients

~ 1.7m

CGM celebrates

40+ years

of client partnerships

Total BFS deposits

$A98.0b

  

BFS home loan portfolio

34%

 on prior year

CGM ranked

No.4 physical

gas marketer

in North America

(1)

(1) Platts Q4-Dec 21

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

 













Further information is also available at

macquarie.com/company

For more details on the operational performance

  

presentation to investors and analysts available at

macquarie.com/fy22-investor-presentation

Lending Banking Capital

solutions

Asset



 

continued

   

    

Operating Groups

Banking and Financial Services (BFS)

BFS provides a diverse range of personal banking, wealth

management, and business banking products, and services



Commodities and Global Markets (CGM)

 

management, market access, physical execution and logistics

solutions to its diverse client base across Commodities,



Central Service Groups

The Central Service Groups provide a range of functions supporting

    

   

 

reporting, legal and risk management requirements.

Risk Management Group (RMG)

An independent and centralised function responsible for

 

monitoring and reporting in relation to Macquarie’s material

risks. RMG designs and oversees the implementation of the risk

 

functionally to the Board Audit Committee and operationally to the



Legal and Governance Group (LGG)

Provides a full range of legal and corporate governance services,

including strategic legal and governance advice and risk assessment

on corporate transactions, treasury and funding, insurance,

regulatory enquiries and litigation.

Financial Management Group (FMG)

Responsible for capital, funding, liquidity, tax and provides strategic

  

the growth of the Macquarie business. It ensures Macquarie Bank

 

  

with a range of external stakeholders on behalf of the Bank.

Corporate Operations Group (COG)

Provides specialist support services through technology,

operations, human resources, workplace, strategy, operational

risk management, data and transformation, resilience and global

security, and also includes the Macquarie Group Foundation.

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

This page has been intentionally left blank.

 



What we stand for

Opportunity

Accountability

Integrity

  

by these three long-held principles that

determine how we conduct business and

  

and principles and what we expect of our

Code of Conduct.

The balance between opportunity and

accountability, while operating with

integrity within a strong risk management

framework, is a feature of Macquarie Bank’s

success and a key factor in our long record

 

Our business strategy

Consistent with the principles of What We Stand For, Macquarie

Bank’s business strategy is focused on the medium-term with the

following key aspects:

Risk management approach

Adopting a conservative approach to risk management underpinned by a sound risk

culture. Macquarie Bank’s robust risk management framework and risk culture are

embedded across all Bank Group entities.

Strong balance sheet

Maintaining a strong and conservative balance sheet.

This is consistent with Macquarie Bank’s longstanding policy of holding a level of capital

that supports its business and managing its capital base ahead of ordinary business

requirements.

Macquarie Bank has a liability driven approach to balance sheet management, where

funding is raised prior to assets being taken on to the balance sheet.

We continue to pursue the strategy of diversifying funding sources by growing our

deposit base and accessing wholesale funding across a variety of products and markets.

Business mix

Conducting a mix of annuity-style and markets-facing businesses that deliver consistent

returns in a range of market conditions.



 

 

commodities.

 

retail clients. This diversity in services and clients mitigates concentration risk and

provides resilience to Macquarie Bank.

Proven expertise

Utilising proven deep expertise has allowed Macquarie Bank to establish leading market

positions as a global specialist in sectors including resources and commodities, energy



Adjacencies

    

selective acquisitions.

   

supporting sustainable evolutionary growth.

Pursuit of growth opportunities

Targeting continued evolution and growth through innovation. We start with knowledge

and skill, and we encourage ingenuity and entrepreneurial spirit coupled with accountability.

   

 

    

changing market conditions within the boundaries of the Risk Appetite Statement (RAS)

approved by the Board.

Our

purpose

 

  





The Code of Conduct is available at

macquarie.com/what-we-stand-for

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

Risk management

Macquarie Bank recognises that a sound risk

culture is a fundamental requirement of an



Risk culture

Macquarie Bank’s risk culture is well established, grounded in

the long-held principles of What We Stand For:  

Accountability and Integrity.

Macquarie Bank’s approach to maintaining an appropriate risk

culture is based on the following three components:

•

setting behavioural expectations: Senior Management, with

oversight from the Board, set behavioural expectations. The

   

principles of What We Stand For 

  

form the basis of all behaviours and actions. These behavioural

   Code of

Conduct, which is actively promoted by Management and

cascaded through the organisation

•

leading and executing: Management implements behavioural

expectations through leadership actions and communication,

organisational governance, incentives and consequence

management and organisational and individual capability

•

monitoring, measuring and reporting: Macquarie monitors



promoting continuous improvement.

Risk management framework

The risk management framework has been established on

the premise that a disciplined approach to risk management

is best maintained with a single risk management framework

   

and Central Service Groups (including Bank Group entities). The

framework is supported by a Macquarie-wide approach to policies

and procedures. Macquarie Bank adopts policies, procedures

 

   

framework is expanded for the Bank Group to appropriately

manage contagion risk between the Bank Group and the

Non-Bank Group.

The Risk Management Group (RMG) adopts the same level of

rigour in relation to risk acceptance, monitoring and reporting for

all Macquarie Group entities consistently.

During the year, Macquarie detected unauthorised trading activity

by one individual in CGM and reported the issue promptly to all

relevant regulators. While there have been no systemic issues

 

P&L perspective, there are learnings from the situation in relation

to processes and enhancements to the control framework have

been implemented. There were no client impacts from this issue.

Refer to the Risk Management section in the MGL Annual

Report for details on Macquarie Group’s risk management

framework, risk culture and conduct risk management,

which apply to all Macquarie Group businesses including

the Bank Group entities

Macroeconomic and other factors

The key macroeconomic and other factors that

impact Macquarie Bank are:

Market conditions

The general condition of markets, driven by both macroeconomic

and geopolitical factors may have a bearing on Macquarie Bank’s



timing of client and principal transactions across businesses and

the value of various equity, credit and market risk exposures held

by Macquarie Bank on its balance sheet.

The value of the Australian dollar

  

denominated in foreign currency. Therefore, net income will

be lower in Australian dollar terms if the Australian dollar

appreciates against other foreign currencies, and net income

will be higher in Australia dollar terms if the Australian dollar

depreciates against other foreign currencies.

Potential regulatory changes





 

  



Funding and liquidity

Macquarie Bank uses deposits and debt markets, among other

funding sources, to fund its assets. Macquarie Bank is therefore

exposed to the risk of an increase in the cost of funding, or of

reduced access to funding sources.

 

nature of Macquarie Bank’s operations. Material risks are those

 

Macquarie or on the interests of the Bank Group depositors.

These include aggregate, asset, conduct, credit, environmental



liquidity, market, operational (including cyber and information

security), regulatory and compliance, reputational, strategic, tax,

and work health and safety risks. These risks, including those

mentioned above, are monitored, mitigated and managed under

Macquarie Bank’s risk management framework.

Further details on the management of these risks

macquarie.com/risk-management

 

continued

 

  

Ownership of risk at the business level

   

that arise in, or because of, the business’ operations, including



risks. Before taking decisions, clear analysis of the risks is sought

to ensure those taken are consistent with the risk appetite and

strategy of the Bank Group entities.

Understanding worst-case outcomes

Macquarie Bank’s risk management approach is based on examining

the consequences of worst-case outcomes and determining

whether these are acceptable and within Macquarie Bank’s risk

appetite. This approach is adopted for all material risk types and

is often achieved by stress testing. Macquarie Bank operates

a number of sophisticated quantitative risk management

processes, but the foundation of the approach is the informed

consideration of both quantitative and qualitative inputs by highly

  

Requirement for an independent



  

 

all material risk acceptance decisions. It is essential that RMG has

 

skilled professionals from a range of disciplines, including those

with trading or advisory and capital markets experience. For all

material proposals, RMG’s opinion must be sought at an early stage

in the decision-making process. The approval document submitted

to senior management must include independent input from RMG

on risk and return.

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

 

  

FULL YEAR TO

 

Movement

$Am $Am



Net operating income 9,554 6,995 37

   (5,887) (4,697) 25

Income tax expense (950) (622) 53

 2,717 1,676 62

Corporate updates

 

  

   

   

 

Refer to Note 39 Acquisitions and disposals of subsidiaries and businesses for additional information.



 



$A



62

 

Group performance

Overview

Operating and Financial Review

  continued

  

(1)

Banking and Financial Services

$A1,001m

 30 

Commodities and Global Markets

$A3,932m

 62 

•



volume growth in the loan portfolio and BFS deposits.

•

Decreased credit and other impairment charges driven by the

  

remain prudent with the combined downside macroeconomic

scenarios having a higher weighting than the upside scenario.



•

higher employment, technology and other operating

expenses, including increased headcount, to support business

growth and to meet regulatory requirements.

•

Increased risk management income with gains across

the platform, particularly in Gas and Power, Resources,



activity and trading activity due to elevated levels of volatility

and price movements in commodity markets, partially

 

 

•

Net income on equity, debt and other investments up

 

Meters portfolio of assets, comprising the industrial and

 

•

Decreased credit and other impairment charges driven by the

  

remain prudent with the combined downside macroeconomic

scenarios having a higher weighting than the upside scenario.



•

increased operating expenses mainly due to the transfer

of MGL’s service entities from the Non-Bank Group to the

 

 

platform and infrastructure, as well as increasing compliance

and regulatory management spend.

     

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

Net operating income

Net operating income of $A9,554 million for the year ended 31 March 2022 increased 376,995 million in the prior year mainly

driven by higher Net interest and trading income, Fee and commission income, Net other operating income and lower Credit and other

impairment charges.

Net interest and trading income Fee and commission income

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

6,667 5,404

 23%

on prior year

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

1,954 1,326

 47%

on prior year

•





the platform, particularly from Gas and Power, Resources,



•

Growth in the average loan portfolio as well as average deposit

volumes in BFS.

•

 

for services provided by the Central Service Groups which were

transferred to MBL during the prior year.

Net operating lease income Credit and other impairment charges

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

339 395

 14%

on prior year

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

(27) (333)

 92%

on prior year

•

Reduction in secondary income in Technology, Media and

Telecoms as well as the partial sale of the UK Meters portfolio

 



portfolio, in CGM.

•



provisioning levels remain prudent with the combined downside

macroeconomic scenarios having a higher weighting than the

upside scenario.

Net other operating income

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

621 203





on prior year

•

Gain on the partial sale of the UK Meters portfolio of

assets in CGM.

Operating and Financial Review

  continued

Operating expenses

Total operating expenses of $A5,887 million for the year ended 31 March 2022 increased 254,697 million in the prior year

    

operating expenses.

Employment expenses Brokerage, commission and fee expenses

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

3,696 2,103

 76%

on prior year

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

505 525

 4%

on prior year

•

  

from MGL’s service entities during the prior year resulting in an

increase in permanent headcount of approximately 7,500 for the



•

  

payments as a result of increased headcount due to the transfer

of the service entities, as well as the improved performance of



•

The cessation of grandfathered commission payments to third

party advisors in line with legislation in BFS.

Non-salary technology expenses Other operating expenses

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

716 327





on prior year

FULL YEAR TO

31 Mar 22 31 Mar 21

$Am $Am

970 1,742

 44%

on prior year

•

 

costs of Central Service Groups during the prior year to the



•

  

of MGL’s service entities to the Bank Group in November 2020:

–

prior to the transfer, the Bank Group recognised its allocation

 

were charged on an arms-length basis

–

since the transfer, the costs of the service entities have

been incurred directly by the Bank Group and recognised in

  

expenses and Non-salary technology expenses.

Income tax expense

   

  

 

    

2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

Statement of Financial Position

  

a combination of business activities, Group Treasury management initiatives and the elevated levels of volatility and price movements in

commodity markets.

Total assets Total liabilities

AS AT

31 Mar 22 31 Mar 21

$Am $Am

349,628 216,848

 61%

on 31 March 2021

AS AT

31 Mar 22 31 Mar 21

$Am $Am

331,660 202,774

 64%

on 31 March 2021

  

assets were as follows:

•

derivative assets of $A84.6 billion as at 31 March 2022 increased

 



 



levels of volatility and price movements. After taking into account



derivative asset was $A15.8 billion (31 March 2021: $A5.1 billion).

Residual derivative exposure is short term in nature and managed

within our market and credit risk frameworks, with a substantial

portion of the exposure with investment grade counterparties

•

cash and bank balances of $A49.0 billion as at 31 March 2022



primarily due to an increase in high quality liquid assets held as

overnight deposit with the Reserve Bank of Australia (RBA)

•



from $A99.0 billion as at 31 March 2021 primarily due to growth in

  

reduction in the BFS car loan portfolio

•

margin money and settlement assets of $A19.4 billion as at



 

 

settlement balances by CGM

•

cash collateralised lending and reverse repurchase agreements of



as at 31 March 2021 primarily due to an increase in Group Treasury

holdings of liquid assets through reverse repurchase agreements



 

•



from $A21.2 billion as at 31 March 2021 primarily due to a decrease

in government bonds and metal inventories in CGM.

liabilities were as follows:

•

derivative liabilities of $A84.2 billion as at 31 March 2022 increased

 



 



elevated levels of volatility and price movements on short positions.



other collateral, the residual derivative liability was $A15.9 billion



•

issued debt securities of $A72.1 billion as at 31 March 2022

 

to the net issuance of short and long-term debt by Group Treasury

and additional net issuance of bondholder notes by securitisation

vehicles in BFS

•

 

$A84.1 billion as at 31 March 2021 primarily due to an increase in

retail and business banking deposits in BFS

•

cash collateralised borrowing and repurchase agreements of



$A4.5 billion as at 31 March 2021 primarily due to the additional

draw down of the RBA Term Funding Facility by Group Treasury

•

margin money and settlement liabilities of $A21.6 billion as at



2021 primarily due to higher trade volumes resulting in an increase

 

balances with CGM.

 

•

due to related body corporate entities of $A11.6 billion as at



  

Non-Bank Group.

Total equity

AS AT

31 Mar 22 31 Mar 21

$Am $Am

17,968 14,074

 28%

on 31 March 2021

 

attributable to earnings of $A2.7 billion generated during the year, and

the issuance of Contributed equity of $A1.0 billion.

Operating and Financial Review

  continued

3.8

years

Weighted

average

maturity

Funding

Macquarie Bank’s liquidity risk management framework is designed to ensure that it is able to meet its funding

requirements as they fall due under a range of market conditions.

Macquarie Bank has diversity of funding across a range of tenors, currencies and products. The weighted average

term to maturity of term funding maturing beyond one year (excluding Term Funding Facility (TFF), equity and





 

Detail of drawn funding maturing beyond one year

5 yrs+4–5 yrs3–4 yrs2–3 yrs1–2 yrs

$A billion

Subordinated debt Equity and hybrids

Debt

Macquarie Bank has a liability driven approach to balance sheet management, where funding is raised prior

to assets being taken on to the balance sheet. Since 1 April 2021, Macquarie Bank has continued to raise term

wholesale funding across various products and currencies.

 

Total

$Ab

Issued paper – Senior and subordinated 7.8

Secured funding  9.0

– RBA Term Funding Facility

(1)

9.5

Loan facilities – Syndicated unsecured loan facilities 3.0

  0.7

Total

(2)

30.0

  



   

(2) Issuances cover a range of tenors, currencies and product types and are Australian dollar equivalent based on FX rates at the time of issuance.



2022 Annual Report

Further InformationFinancial ReportDirectors’ ReportAbout

Capital

Under Basel III rules, APRA requires authorised deposit-taking institutions (ADIs) to have a minimum ratio of Tier 1 capital to risk-weighted

   

Prudential Standard 110

(1)

   



(2)

Macquarie Bank is well capitalised, with the following capital adequacy ratios as at 31 March 2022.

Bank Group Level 2 Basel III ratios as at 31 March 2022 

(3)

APRA Basel III

  14.6 11.5

Tier 1 Capital Ratio 16.5 13.2

Leverage Ratio 5.6 5.0

For further information relating to the capital adequacy of Macquarie Bank, refer to

 macquarie.com/fy22-mda

   

  



  



Directors’

Report

Helping more Australians

transition to electric

At Macquarie, we’re committed to helping Australians

transition to an electric car easily. Since launching

 

we have developed a range of tools and insights to

help guide our customers through the process.

With information ranging from comparisons of electric

vehicles in the market to answering the top questions

and concerns, we want to empower our customers

to make the right choice for their lifestyle.

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Directors’ Report



  

 

Directors

At the date of this report, the Directors of MBL are:

Independent Directors













M. Roche

G.R. Stevens AC



Executive Voting Directors



S.R. Wikramanayake





 





 

 

 







Independent Director and Chairman on 9 May 2022. Mr Stevens will



Those Directors listed as Independent Directors have been

   

  

 

experience of the Company Secretaries at the date of this

report are set out on pages 28 to 34 of this report

Principal activities

  



 



is a subsidiary of MGL and is regulated by APRA as an authorised

deposit-taking institution (ADI). In the opinion of the Directors,

  



 

Result

 

  



 



was $A2,717 million (2021: $A1,676 million).

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Dividends and distributions

 







 

 

 

 

•

a review of the operations during the year and the results

 

•

 

•

comments on business strategies and prospects for future



In respect of likely developments, business strategies and prospects



 

been omitted.

Directors’ Report



Directors’ relevant interests

 

Corporations Act 2001 

 

disclosable relevant interests are listed in the table below:

     

    

Name and position Direct and indirect interests Number held

Executive Voting Director

S.D. Green Macquarie ordinary shares (MQG) 166

 

Restricted Share Units (RSUs)

(1)

27,951

Macquarie Private Infrastructure Fund units 90,000

S.R. Wikramanayake MQG 1,007,159



(1)

397,522



(1)

98,832

MAFCA Investments Pty Ltd ordinary shares 2,000,000

Independent Directors

 MQG 16,062

Macquarie Group Capital Notes 3 (MCN3) 7,177

Macquarie Group Capital Notes 4 (MCN4) 4,000

Macquarie Bank Capital Notes 2 (BCN2) 1,500

 MQG 8,895

 408,699.89

 MQG 7,480

Macquarie Group Capital Notes 5 (MCN5) 2,000

Macquarie Bank Capital Notes 3 (BCN3) 3,000

 – –

 MQG 2,210

M. Roche MQG 2,156

G.R. Stevens MQG 4,847

 MQG 7,267

 MQG 14,933

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Meeting attendance

Board and Board Committee meetings and attendance

The number of meetings of the Board of Directors (the Board) and of the Committees of the Board and the individual attendance



Regular Board meetings

(1)

BAC meetings

(1)

BRiC meetings

(1)

Special Board meetings

(1)

Number of meetings 9 6 6 3

 9/9 – 6/6 3/3

S.D. Green

(2)

7/7 – – 2/2

S.R. Wikramanayake 9/9 – – 3/3

 9/9 – 6/6 3/3

G.M. Cairns

(3)

1/1 – 1/1 –

 9/9 6/6 6/6 3/3

 9/9 6/6 6/6 3/3



(4)

9/9 – 5/5 3/3



(5)

– 1/1 1/1 1/1



9/9 – 6/6 3/3



(6)

2/2 – – 1/1

M. Roche 9/9 – 6/6 3/3

G.R. Stevens 9/9 6/6 6/6 3/3

 9/9 6/6 6/6 3/3

(1) Number of meetings attended by the member/total number of meetings eligible to attend as a member.

  

  

  

   

 





 

 

 



and MBL. The membership of the Committee consists of all the



 

Macquarie Group’s risk management framework and advising the

  



In addition to the BAC and the BRiC, the MGL and MBL Boards are

also assisted by the Board Governance and Compliance Committee

(BGCC) and the Board Remuneration Committee (BRC).

The BGCC assists the Board of MGL for itself and its subsidiaries

with adopting the most appropriate corporate governance

standards for the Macquarie Group, including MBL, and assists

 

  

including MBL. The BRC makes recommendations to the Boards

of MGL and MBL that promote appropriate remuneration policies

and practices for the Macquarie Group consistent with Macquarie

Group’s risk management framework.

There was one Board sub-committee convened during the

period, with two meetings held. The meetings were attended









All Board members are sent Board Committee meeting agendas and

may attend any meeting.

 



 



Directors’ Report







  

directors and secretaries of MBL and its wholly-owned subsidiaries

(including at this time the Directors named in this report and the

Secretaries) certain liabilities and costs incurred by them in their

respective capacities.



to the exclusions described as follows):

•

   

•

all legal costs incurred in defending or resisting

(or otherwise in connection with) proceedings in which the

   

•

legal costs incurred by the person in good faith in obtaining legal

advice on issues relevant to the performance and discharge of



if that has been approved in accordance with MBL policy.

The indemnity does not apply to the extent that:

•

MBL is forbidden by law to indemnify the person against



•

 

costs would, if given, be made void by law.

MBL has also entered into a Deed of Access, Indemnity, Insurance



the Directors.

Under the Deed, MBL agrees to, among other things:

•

indemnify the Director upon terms broadly consistent with the

indemnity contained in MBL’s Constitution

•

take out and maintain an insurance policy (or procure that an

insurance policy is taken out and maintained) against liabilities



wholly owned subsidiaries. The insurance policy must be for

an amount and on terms and conditions appropriate for a

reasonably prudent company in MBL’s position. Insurance must

be maintained for seven years after the Director ceases to be a

Director or until any proceedings commenced during that period

  

•

grant access to Directors to all relevant company papers

(including Board papers and other documents) for seven

years after the Director ceases to be a Director or until any

  

resolved (including any appeal proceedings).

In addition, MGL made an Indemnity and Insurance Deed Poll on

 

made by MGL under the Deed Poll have been given to each of the

directors, secretaries, persons involved in the management and

certain other persons, of MGL and its wholly-owned subsidiaries

(which includes MBL) and other companies where the person is

 

subsidiaries. The Deed Poll provides for broadly the same indemnity

 

the Deed Poll as for the Deed described above.

  

documents. The Deed Poll largely supersedes previous deed polls

which were provided by MBL which were on similar terms. Certain

 

deed polls.

 

Group, is in place that provides cover for each person in favour of

whom such insurance is required to be taken out under the Deed and

the Deed Poll and for MBL in indemnifying such persons pursuant to

the Deed and the Deed Poll. Relevant individuals pay the premium

attributable to the direct coverage under the policy and Macquarie

   

 

policy prohibits disclosure of the premium payable under the policy

and the nature of the liabilities insured.

To the extent permitted by law, MBL has agreed to reimburse its

auditor, PricewaterhouseCoopers (PwC), for any liability (including

reasonable legal costs) PwC incurs in connection with any claim by

a third party arising from MBL’s breach of the letter of engagement



Environmental regulations

MBL and its subsidiaries have policies and procedures in place that

 

 

the Commonwealth or of a State or Territory, those obligations are

  

The Directors have determined that there has not been any material



Non-audit services

Fees paid or payable to PwC, being the auditor of the Consolidated





of amounts paid or payable to PwC and its related practices

are disclosed in Note 38 Audit and other services provided by

PricewaterhouseCoopers 

 

did not compromise the auditor independence requirements of the

Act for the following reasons:

•

 Auditor Independence

Policy, restricts the external auditor from providing non-audit

services under which the auditor assumes the role of



audits its own professional expertise, or creates a mutual or



   

non-audit assignments awarded to the external auditor must

be approved in advance by the BAC or the BAC Chairman,

  

•

the BAC has reviewed a summary of non-audit services provided

by PwC, including details of the amount paid or payable, and has

 



 

by the auditor and its related practices is compatible with the

general standard of independence for auditors imposed by the Act.

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Rounding of amounts

In accordance with ASIC Corporations (Rounding in Financial/

Directors’ Reports) Instrument 2016/191, amounts in the Directors’

  



 

Events subsequent to balance date

At the date of this report the Directors are not aware of any

matter or circumstance, other than transactions disclosed in the



 

 





Peter Warne

Independent Director and Chairman

Stuart Green



Sydney

6 May 2022

Auditor’s independence declaration

As lead auditor for the audit of Macquarie Bank Limited for the year



and belief, there have been:

(a) no contraventions of the auditor independence requirements

Corporations Act 2001(Cth) in relation to the audit, and

(b) no contraventions of any applicable code of professional

conduct in relation to the audit.

This declaration is in respect of Macquarie Bank Limited and the



Kristin Stubbins

Partner

PricewaterhouseCoopers

Sydney

6 May 2022

PricewaterhouseCoopers, ABN 52 780 433 757





T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under

Professional Standards Legislation.

   

Peter H

Warne

BA (Macquarie), FAICD

Age: 66

Resides: New South Wales

Independent Chairman

of MGL and MBL since

April 2016

 

of MGL since August 2007

 



Mr Warne is a member

of the BRiC

Stuart D Green



Business School), FCA, AMCT

Age: 57

Resides: New South Wales

Managing Director and Chief









Experience

Peter Warne has extensive knowledge of, and experience in,



of senior roles at Bankers Trust Australia Limited, including as

 



from 1990 to 1999, then from 2000 to 2006.

 





Limited, a position he held to 2020. Mr Warne has previously

  

 

from 2012 to 2020, where he served as Chairman from

2019 to 2020.

Listed company directorships (last three years)

•





Director (since November 2021)

•

 

Other current directorships/appointments

•

Board member, Allens

•

Member, ASIC Corporate Governance Consultative Panel

•





•

Member, Corporate Governance Committee,

 

Experience

  

 

 

  

transactions for Macquarie. In 2002, Stuart assumed

responsibility for investor relations for Macquarie’s listed

airport fund, Macquarie Airports, before moving to become

 

of listed funds. In 2008 he was appointed Macquarie Group’s

 

responsible for managing the Group’s relationships with

investors and analysts, government and media.



  

 

 

corporate strategy.





Treasurer and Chair of the Finance & Audit Committee.

Other current directorships/appointments

•

Director, Australian Financial Markets Association

•

Member, Australian Banking Association Council

•

Member, Macquarie Group Foundation Committee

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Shemara R

Wikramanayake

BCom LLB (UNSW)

Age: 60

Resides: New South Wales

Managing Director and Chief



since December 2018



of MGL and MBL

since August 2018

Experience

Shemara Wikramanayake has been Macquarie Group’s



 

Sydney. In her time at Macquarie, Shemara has worked in six

countries and across several business lines, establishing and

 



management business in the US and Canada. Shemara has also

served as Chair of the Macquarie Group Foundation.



 

24 markets. Macquarie Asset Management grew to become a

world-leading manager of infrastructure and real assets and a

top 50 global public securities manager.

Shemara sits on the World Bank’s Global Commission on

 

Climate Finance Leadership Initiative (CFLI). She currently leads

emerging markets workstreams for CFLI and the Glasgow

Financial Alliance for Net Zero (GFANZ).

 

lawyer at Blake Dawson Waldron in Sydney. She holds Bachelor

of Commerce and Bachelor of Laws degrees from UNSW and

 

Business School in 1996.

Other current directorships/appointments

•

Board member, Institute of International Finance

•

Founding Member, Glasgow Financial Alliance for Net

Zero (GFANZ)

•

 

Co-Chair, CFLI India

•

Founding Commissioner, Global Commission on Adaptation

•

Member, Australian Federal Government’s University

Research Commercialisation Scheme Taskforce

•

Member, Australian Federal Government’s Technology

Investment Advisory Council

•

Member, UK Investment Council

•

Member, Investment Attraction Council, Investment New

South Wales

Gender diversity

Board independence

Male:Female:

Board tenure

82%

of Board members

are independent

directors

0-3 years

6-9 years

9+ years

Directors

3-6 years

Directors’ experience and special responsibilities

Continued

Jillian R

Broadbent AC



(Sydney)

Age: 74

Resides: New South Wales

 

of MGL and MBL since

November 2018

Ms Broadbent is a member

of the BRiC

Philip M





GAICD, SF Finsia

Age: 64

Resides: New South Wales

 

of MGL and MBL since

August 2018



the BRiC and a member

of the BAC

Experience



knowledge and markets expertise, including a deep knowledge

of risk management and regulation in these areas. She also

has considerable executive management and listed company

board experience.

Ms Broadbent spent 22 years at Bankers Trust Australia until

1998, initially as an economic strategist and then as executive

director responsible for risk management and derivatives in

foreign exchange, interest rates and commodities.

Ms Broadbent was also a Member of the Reserve Bank of

Australia Board between 1998 and 2013 and has previously



Corporation, and as a director of ASX Limited, SBS, Coca Cola

Amatil Limited, Woodside Petroleum Limited, Qantas Airways

 

Limited and the National Portrait Gallery of Australia.

Listed company directorships (last three years)

•

Director, Woolworths Group Limited



Other current directorships/appointments

•

Director, National Portrait Gallery Board Foundation

•

Director, Sydney Dance Company

Experience

 

of Westpac Banking Corporation from April 2014 until his

 

the responsibility for overseeing and supporting relationships

with key stakeholders of Westpac including industry

 

responsible for the Group’s Mergers & Acquisitions function.



  

  

 

New Zealand, the United States, the United Kingdom and

 

funds management, balance sheet management and risk



Australia and has also held executive positions at AIDC Limited

and Citigroup.

Listed company directorships (last three years)

•

Director, Lendlease Corporation Limited



Other current directorships/appointments

•

 

•



2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Michael J

Coleman

MCom (UNSW), FCA,

FCPA, FAICD

Age: 71

Resides: New South Wales

 

of MGL and MBL since

November 2012

Mr Coleman is Chairman

of the BAC and a member

of the BRiC



BCom (UQ), FCA, ACA

Age: 57

Resides: Queensland

 

of MGL and MBL since

March 2022



of the BAC and BRiC

Experience

After a career as a senior audit partner with KPMG for

 

 

  

governance.

Mr Coleman has been the Chairman of Bingo Industries

Limited and ING Management Limited, a member of the

Audit Committee of the Reserve Bank of Australia and a

member of the Financial Reporting Council, including terms as

Chairman and Deputy Chairman. During his time with KPMG,

  

and advisory services to large banks, investment banks and



Partner Assurance and Advisory from 1998 to 2002, National

Managing Partner for Risk and Regulation from 2002 to



Management from 2002 to 2011.

Listed company directorships (last three years)

•

Chairman, Bingo Industries Limited

(March 2017–August 2021)

Other current directorships/appointments

•

Deputy Chair and Chair of the Audit and Risk Committee,



•

Chairman, Reporting Committee,

Australian Institute of Company Directors

•

Board member, Legal Aid NSW

•

Councillor, NSW Division, Australian Institute

 

•

Member, Nominations and Governance Committee,

Chartered Accountants Australia and New Zealand

Experience

 

 

Kingdom and Australia, with extensive experience in leading

large global teams in the provision of external audit, internal



Michelle was the Global Lead Audit Partner for a number



  

Chair of Audit, KPMG UK from May 2019 to September 2021.

During the period from May 2019 to February 2022 she was a



Financial Services for KPMG Australia, where she was also a

member of the board.

Listed company directorships (last three years)

•

 

Directors’ experience and special responsibilities

Continued

Rebecca J

McGrath

 



Age: 57

Resides:

 

of MGL and MBL since



Ms McGrath is a member

of the BRiC

Mike

Roche

BSc (UQ), GAICD,

FIA (London), FIAA

Age: 69

Age: New South Wales

 

of MGL and MBL since



Mr Roche is a member

of the BRiC

Experience

Rebecca McGrath is an experienced professional company

director and Chair, with substantial international business

experience. She spent 25 years at BP plc. where she held

 



Management Board for Australia and New Zealand.

Ms McGrath has served as a director of CSR Limited,

Big Sky Credit Union and Incitec Pivot Ltd, and as Chairman of



Advisory Council. She has attended executive management

 

University and MIT in Boston.

Listed company directorships (last three years)

•



Director (since November 2010)

•

Director, Goodman Group (since April 2012)

•

Director, Incitec Pivot Limited

(September 2011–December 2020)

Other current directorships/appointments

•

Chairman, Scania Australia Pty Limited

•

Director, Investa Wholesale Funds Management Limited

•



•



 

•

Member, National Board, Australian Institute

 

•

Member, ASIC Corporate Governance Consultative Panel

Experience

 

as a highly skilled and experienced provider of strategic,

 

  

 

Capel Court/ANZ Capel Court.

Mr Roche spent more than 20 years at Deutsche Bank





takeovers, acquisitions, privatisations, and divestments.

 



was a member of the Takeovers Panel for two terms from

2008 to 2014.

Listed company directorships (last three years)

•

Director, Wesfarmers Limited (since February 2019)

Other current directorships/appointments

•

Director, MaxCap Group Pty Ltd

•

Director, Six Park Asset Management Pty Ltd

•

Director, Te Pahau Management Ltd

•

Managing Director, M R Advisory Pty Ltd

•

Co-founder and Director, Sally Foundation

•

Member, ADARA Partners Corporate Advisory



2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Glenn R

Stevens AC





Age: 64

Resides: New South Wales

 

of MGL and MBL since

November 2017

Mr Stevens is a member



Nicola M





Age: 61

Resides: New South Wales

 

of MGL and MBL since

February 2014



member of the BAC and BRiC

Experience

Glenn Stevens worked at the highest levels of the Reserve

Bank of Australia (RBA) for 20 years and, as well as developing



  

internationally. Most recently, he was Governor of the Reserve

Bank of Australia between 2006 and 2016.

Mr Stevens has also made key contributions to a number of

Australian and international boards and committees, including

as chair of the Australian Council of Financial Regulators

between 2006 and 2016, as a member of the Financial Stability

Board and on a range of G20 committees.

Other current directorships/appointments

•

Board member, NSW Treasury Corporation

•

Director, Anika Foundation

•

Director, Lowy Institute

•

Deputy Chair, Temora Aviation Museum

Experience

 

 

 

was a partner at King & Wood Mallesons (and its predecessor,

 

  

services, resources and energy, and infrastructure sectors.

She held several key management positions at King & Wood



Kong and Managing Partner, Practice in Sydney.

Listed company directorships (last three years)

•

Director, Lendlease Corporation Limited

(since September 2013)

•

 

Other current directorships/appointments

•

Director, MetLife Insurance Limited

•

Director, MetLife General Insurance Limited

•

 

•



•

Member, Takeovers Panel

•

Member, National Board,

Australian Institute of Company Directors

•



•

Director, UNSW Foundation Limited

Directors’ experience and special responsibilities

Continued

Dennis Leong



 

Experience



has had responsibility for Macquarie’s company secretarial

requirements, general and professional risks insurances

   

28 years company secretarial experience and 12 years

  

Australia Limited.

Simone Kovacic



 

Experience

Simone Kovacic is a Division Director of Macquarie,

 

responsibilities and provides governance and corporate advice.

She has over 20 years of experience as a corporate lawyer at

  

Smith Freehills, and Skadden, Arps, Slate, Meagher & Flom LLP

in the US.

Company secretaries’

 

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Introduction

   

    

relating to the senior executives of Macquarie Bank.

 

  

  

   

 

   

risks. This incorporates detailed programs of work across governance, remuneration, risk culture, regulatory reporting, prudential risk

 

to the MBL Board.

The remuneration program of work is underway to ensure that the MBL remuneration framework supports the best interests of MBL and

strengthens the voice of the Bank in the oversight, design and determination of remuneration outcomes for MBL. This will see changes to

MBL’s remuneration governance arrangements including the establishment of an MBL Board Remuneration Committee (BRC) made up of



  

to APRA’s new Prudential Standard CPS 511 Remuneration (CPS 511) that impacts the whole Macquarie Group (refer to pages 38 to 39).

Remuneration Report

Continued

Remuneration framework

     

remuneration framework.

 

      

industry expertise, align their interests with shareholders to meet the needs of clients and customers and ensure that the spirit and intent of

regulatory requirements are upheld. This broad approach is reviewed regularly to ensure the framework continues to meet our remuneration

 

structure are set out on pages 38 to 39.

 

businesses over the medium to long-term, taking accountability for all decisions and their accompanying risk management, customer,

economic and reputational consequences.

This approach has been fundamental in ensuring we can continue to attract, motivate and retain exceptional, entrepreneurial and ethical

people across the global markets in which we operate. We hire world-class people in 33 highly competitive markets. These people come from,

  

  



    

Our purpose:

Empowering people to innovate

and invest for a better future

   Accountability Integrity

  Remuneration principles

Macquarie Bank’s remuneration framework aims to:

•

deliver strong company performance over the short and

long-term whilst prudently managing risk

•

attract, motivate and retain exceptional people with deep

industry expertise

•



sustained results for our customers, clients and community

•

promote innovation and the building of sustainable

businesses

•



Bank, our culture and the principles of What We Stand For

•

foster a diverse and inclusive work environment.



•

emphasising performance-based remuneration

•

determining an individual’s variable remuneration based on



•

   

remuneration to enable risk outcomes to be considered over

a long period

•

 





•

   

 

•

 

 

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Remuneration framework continued

 

 

Remuneration framework

Fixed Remuneration

•

    

market practice

•

   

to avoid inappropriate risk-taking

•

   

•

  

Performance-based Remuneration

Criteria  Performance Share Units

Eligibility

•

all permanent employees

•



Determination

•

 





–



–

approach to risk management and

compliance

–

business leadership including outcomes for

customers and the community

–

people leadership and professional conduct

including the role-modelling of our culture

and purpose and our long-standing principles

of What We Stand For

•





their contribution to driving the collective

performance of MBL and Macquarie Group

•

allocations are based on the face value of shares

on the grant date

•



Structure

•

  





•

long deferral periods (up to seven years for the



•

 

a combination of MGL equity and

Macquarie-managed fund equity

•



 



•

PSUs are structured as Deferred Share Units

(DSUs)

(1)

with no exercise price

•

no right to dividend equivalent payments

Malus

•

applies for senior employees, including all



•

applies to all awards

Forfeiture

•

 

upon leaving Macquarie Group except in certain

circumstances

•



upon leaving Macquarie Group except in



(1)    

statements in the Financial Report.

Remuneration Report

Continued

Remuneration framework continued



conditions and complies with regulatory expectations and corporate governance developments. During the year, to address both regulatory

requirements under CPS 511 and the evolving expectations of our stakeholders, the Boards undertook a holistic review of all structural

  

considered diverse perspectives, including those of shareholders and regulators, as well as global peer group benchmarking and increased

global competition for talent in many of Macquarie Bank’s areas of activity.

The following changes to the remuneration framework have been approved by the MGL and MBL Boards and are being implemented in a

phased approach from FY2022. The MBL Board believes that the revised arrangements are consistent with our longstanding remuneration

principles and allow for ongoing attraction, motivation, retention and accountability of talent, respecting and recognising the expectations



Component Remuneration arrangements Rationale/link to

  

Fixed

Remuneration



 





  

 

comparatively low level, relative to the industry, and at a low proportion

  

Role

Current

($Am)

Revised

($Am)

 0.7 1.3

 0.8 1.5

 0.7-0.75 1.0-1.1

Preserves the underlying remuneration

principles of paying for performance

 

remuneration levels relative to

the industry.

Addresses external market pressures.

 Retention and vesting arrangements:

  

rates and vesting periods will be reduced for certain senior employees

but remain long enough to appropriately consider the time horizons of

risk. Retention rates and vesting periods will meet or exceed both the

minimums required under CPS 511 and deferral arrangements of many of

Macquarie’s global comparators.

Role

Current Revised

Retention

(%)

Vesting

& release

Retention

(%)

Vesting

& release





in years 3-7



in years 3-5



80 70



60 50

Designated



Directors

(2)

50 40

Note, the stated vesting periods do not include the performance year,

  

over which performance is assessed (i.e. in the above table, for senior

  



a vesting period of years 4 to 8).

  

remuneration and continues to enable

risk outcomes to be considered over a

prolonged period. The changes ensure

that regulatory requirements are upheld

and that prevailing market conditions

are taken into consideration.

(2)  

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Component Remuneration arrangements Rationale/link to

  

  

Where the Board exercises its discretion to accelerate the vesting of

 

the Macquarie Group or redundancy), that release currently occurs over

the period from six months to two years after termination.

  

six-month release date post-termination will be removed. Amounts that

 

 

12 months and amounts that would have vested after 12 months will now

be released after 24 months.

  

  

certain employees and will instead be kept on its original vesting schedule,

as set out in the following table:

Role Current FY2023 FY2024





6 to 24

months

12 to 24

months

0 to 60

months



12 to 24

months

PSUs From FY2024, the vesting period for PSUs granted will be extended by a



after four years).

 

increases the alignment of the interests



long-term.

Malus    

 

of malus provisions have also been expanded (see page 48), to align to CPS

511 and the expectations of other global regulators.

From FY2024, the malus provisions will be further expanded to include all

employees with deferred performance-based remuneration and clawback

provisions will be introduced for certain senior employees to align

with CPS 511.

Strengthens the alignment between

remuneration and prudent risk

management and aligns the malus

framework to APRA’s expectations as

set out in CPS 511.

In addition to these changes, as set out in the Introduction, a program of work is underway to ensure that the MBL remuneration framework

supports the best interests of MBL and strengthens the voice of the Bank in the oversight, design and determination of remuneration

outcomes for MBL. This will see changes to MBL’s remuneration governance arrangements including the establishment of a MBL BRC made

 

Remuneration Report

Continued



 

  

Remuneration outcomes are based on realised outcomes and are determined through a principles-based approach, taking into consideration

   

 

 

   

Permanent employees are required to have at least one formal Year in Review with their manager each year. The Year in Review comprises

two core components:

•

what    

•

how cultural/behavioural expectations were demonstrated, including the principles of the Code of Conduct and the cultural standards of

the business group.

 

 

Areas considered

Financial/

business results

•

  

•

 

•

  

  

robustness of the risk management framework

Risk management and

compliance

•



•

motivating a culture of disciplined risk management, and regulatory, policy and business compliance that



•

  

across the organisation

Business leadership

•

business growth and innovation

•

delivering solutions for our customers and the communities in which we operate

•

relationship with external stakeholders, including regulators

People leadership and

professional conduct

•

conduct and behaviour consistent with the Code of Conduct and What We Stand For

•

fostering a diverse and inclusive work environment

•

talent development

•

  

    

aligned to our purpose and culture

   

   

   

When determining individual allocations, consideration is given to any matters raised in the independent reports provided to the BRC by

 

  

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

 

      

    

  

Operating / Central Service Group Level

Financial performance

  

•

contribution to

  

•



Regulatory Capital

•

funding requirements

and usage.

For Central Services Groups,

based on the quality and

integrity of control functions

and support services, and not

primarily determined with

 

Risk management

•

 

(e.g. capital usage)

•

extent and nature of





reputational, cultural or

compliance matters

•

regulatory environment

and regulatory risk

considerations.

 

considerations

•

innovation, new business

development (including

acquisitions) and maturity of

the business

•

reliance on intellectual

 

•

customer/client and

community outcomes

•

impact of one-time

gains/losses.

Market position and trends

•

overall remuneration levels

in the market in which each

business operates

•



considerations.

Macquarie Group / Macquarie Bank level

Additional considerations at a Macquarie Group and Macquarie Bank level include:

•

    

•

Group capital metrics (including prudential ratios) and liquidity considerations

•

      



•

reasonableness of the resultant estimated compensation expense to income ratio and how it compares to that of peers

•

regulatory considerations, including any company-wide risk and conduct matters

•

  

 

•



   

factors, including risk and conduct matters, have been appropriately taken into consideration.

Remuneration Report

Continued

 

   

  



(3)

  

   

(4)

These arrangements ensure that

  

enabling risk outcomes to be considered over long periods.

Retention and vesting arrangements are determined by the BRC according to prevailing market conditions, remuneration trends, and

 

 

The table below summarises the standard retention and vesting arrangements applicable for FY2022. These vesting periods do not include

the performance year but begin following the date remuneration is awarded.

 

Role   

(5)

 60



 80

 60

 50

 40 



(6)

25–60 

  

 

 

 



 

 

Role

MEREP

(MGL ordinary shares) %

DPS Plan

(Macquarie-managed fund equity) %

 90 10

 80–90 10–20



(7)

80–100 0–20



(8)

100 0

 

•

  

   

requirements

•

  

   

with those of their clients.

(3)  

   

    

Employee equity participation 

DPS Plan comprises exposure to a notional portfolio of Macquarie-managed funds. Retained amounts are notionally invested over the retention period. This investment is described



(4)    

  

(5)     

(6) Above certain monetary thresholds.

(7)   

(8)    

 

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

 

  

  

  

 

   

    

where, for example, their employment ends in the case of retirement from the Macquarie Group, redundancy, death, serious incapacitation,

 



 

  

  

other conditions as it considers appropriate. This year there were no executives for whom such discretion was exercised.

Conditions of early release to departing Executive Directors – Post Employment Events

 

   

  

(a)    

(b)       

 

   

 

accordance with the following table:

First Period Second Period Third Period

Time post-departure Six months Six months to one year 

Unvested retained

 

From all but the last two

years of employment

From the second year prior to the end

of employment

From the year prior to the end of

employment

Subject to 

 

set out previously

 



 



 



 





Where the release

is by reason of

retirement from the

Macquarie Group

As above As above and in addition, the release

 



As above and in addition, the release is

 

during the Second or Third Period

 

 

   

  

noted above.

Remuneration Report

Continued

Performance Share Units

This section describes the way in which PSUs are determined, structured and delivered.

Allocation and structure

 

performance hurdles and determined with reference to Macquarie Group’s performance as a whole. As such, they provide an additional

   

 

remuneration.



performance of Macquarie Bank and Macquarie Group, including their collaboration across businesses.

   

number of PSUs to be allocated is calculated by dividing the face value of the award by the price of MGL ordinary shares on or around the

date of grant.

 

payments. There is no exercise price for PSUs.

Performance hurdles

The following table summarises the key terms of PSUs and the performance hurdles for FY2022:

EPS CAGR hurdle ROE hurdle

Application  

Performance measure  

vesting period (four years)

(9)

 

(four years)

(9)

relative to a reference group of global



(10)

The reference group for awards is Bank of America

Corporation, Barclays PLC, Credit Suisse Group AG,

 

Morgan Chase & Co., Lazard Ltd, Morgan Stanley

and UBS AG.

Hurdle Sliding scale applies:

•



•



 

relevant awards would become exercisable

Sliding scale applies:

•



 

•

 

 

 



Forfeiture

•

malus provisions apply

•

the standard policy is that unvested PSUs will be forfeited upon termination

•

in the case of retirement from the Macquarie Group, redundancy, death, serious incapacitation, disability,

serious ill-health or other limited exceptional circumstances, the Board or the BRC has the authority to either

accelerate the vesting of PSUs or to permit the PSUs to continue to vest in accordance with the original

 

•

should a change of control occur

(11)

the Board or the BRC has discretion to determine how unvested PSUs

should be treated, having regard to factors such as the length of time elapsed in the performance period, the

 

(9) PSUs awarded prior to FY2020 vested in two equal tranches after three and four years.

(10) Comparator company information is presented in the same order throughout the Remuneration Report.

(11)  

  

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Rationale for hurdles

 



performance metrics to be used as hurdles as well as the levels at which the hurdles are achieved. The international reference group used for

  

and global footprint. The BRC also considers historical and forecast market data, the views of corporate governance bodies, shareholders

and regulators, as well as market practice.

  

•

  



•

the approach is consistent with that advocated by APRA in not using TSR as a measure

•

  

•

    

preferable to an all-or-nothing test, which some have argued could promote excessive risk-taking

•

 

 



•

 

performance of most of the ASX 20, global reference group and relevant indices over time

•

   



•

  

international practice.

  

 

Historical EPS tranche outcomes

Full vesting



No vesting



Partial vesting



Historical ROE tranche outcomes

Full vesting



No vesting



Partial vesting



Use of an international reference group

  

     

   

•

     

broadly operate in the same markets and in similar business segments, and compete for the same people as Macquarie Group

•

Macquarie Group has no comparable Australian-listed peers.

In addition, the BRC considers it important to not intervene reactively to remove under-performers or over-performers in any given period.

An organisation’s period of under-performance is generally followed by a period of over-performance.

Remuneration Report

Continued

Executive KMP – PSUs vesting during FY2022

    

   

in the international reference group (as well as Macquarie Group) and the calculations were reviewed independently. The results showed that

the performance hurdles:

•

   



•

  



PSU tranche

EPS CAGR Hurdle ROE Hurdle

Macquarie

Group result

(for vesting period) Hurdle Outcome

Macquarie

Group result

(for vesting period) Hurdle Outcome

2017

Tranche 2









exercisable



(88

percentile)



percentile

(12)



percentile

(12)



exercisable

2018

Tranche 1









exercisable



(88

percentile)



percentile

(13)



percentile

(13)



exercisable

(12)     

(13)     

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Culture, accountability and remuneration

This section describes how risk and conduct are considered throughout the remuneration approach.

Risk culture

     What We Stand For   

     

   

   

outlined in the MBL Board approved Code of Conduct, which is actively promoted by management and cascaded through the organisation

 

from senior management, policy reminders, training, and learning and development activities. The Board is able to assess our culture in a

    

  

 

 

risk, and their alignment to the What We Stand For principles. They understand there are potential consequences for non-compliance

  

   

 

Alignment of remuneration with risk outcomes

  

  

   

The Board is aware of the increasing focus of regulators and shareholders on ensuring risk-related matters that come to light subsequent to

remuneration being awarded are appropriately factored into remuneration decisions. Macquarie Bank’s retention and vesting arrangements

provide a mechanism for the Board to consider risk outcomes over a long period. Furthermore, where an investigation has commenced into

a risk or conduct-related matter that may result in forfeiture or, for senior employees, the application of malus, Macquarie Bank may further

   

Remuneration Report

Continued

Culture, accountability and remuneration continued

As set out on page 39, the BRC reviewed the malus framework for FY2022 and expanded its scope to apply to a wider group of employees

   

to CPS 511.



   

•

determined as part of assessing an individual’s performance each year

•

the annual assessment includes consideration of compliance with the risk management framework and with the behavioural

expectations outlined in the Code of Conduct

•

in addition, any outcomes from the consequence management process (such as a formal warning) or the independent reporting from



Forfeiture   

•

where an individual’s employment is terminated due to a compliance or conduct concern (or they resign), unvested remuneration is

forfeited, as per our standard policy.

Malus Events (expanded for FY2022) Applies to senior employees

The malus provisions, which apply across the whole Macquarie Group, provide the MBL and MGL Boards or their delegates with the ability

  

it is determined:

•



•

the employee has at any time:

–



–

acted dishonestly (including, but not limited to, misappropriating funds or deliberately concealing a transaction)

–

   

–

acted or failed to act in a way that contributed to, and/or by virtue of their role or seniority is accountable for:

–



–



–

MGL, MBL or any Group within Macquarie Group

(14)

 

–

    

or provision

–



–



   

 

The BRC considers whether, and the extent to which, to apply malus, taking into account local employment laws, the nature and

circumstances of the event and any other redress that has been or may be applied.

(14)      

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Risk adjustment processes

    

   

   

including if there has been a detriment to customers or any impact on prudential standing.

The diagram below provides an overview of these processes:

Independent control function input when determining remuneration outcomes

Risk Management Group Internal Audit Legal

 

  



compliance and operational incidents,



risk matters.

 

BRC with an independent report detailing

notable internal audit issues and any trends

at company-wide or group level.

The General Counsel provides a further

source of independent input and, in



there are any incidents (including any



be brought to the attention of the BRC



Human Resources

  

     



  

   

Consequence management process

Incidents, breaches of policy and misconduct issues are regularly reported to senior management. There are a number of processes

   

of remuneration outcomes, including the review and challenge by senior management of consequence management outcomes for

consistency at year end.

  

available and/or retained amounts) to an employee may be deferred to allow for the investigation to be completed.

Consequence management outcomes

  

 

performance-based remuneration, impact on promotion, formal warnings or termination.

  

will be reduced to zero. Promotion decisions may also be impacted. Impacts may also be applied where a formal warning has not been issued.

  

In FY2022, for Macquarie Bank, there were 63 (FY2021: 81) matters involving conduct or policy breaches that resulted in formal

consequences. These included 29 (FY2021: 38) Code of Conduct or appropriate workplace behaviour related matters and 34 (FY2021: 43)

 

•

for 25 matters, termination of employment was the outcome (FY2021: 15)

•

for 38 matters, a formal warning was issued (FY2021: 66). Additional consequences were applied as appropriate including additional

    

 



The 63 matters were considered isolated incidents and there was no evidence of broader systemic conduct issues.

Remuneration Report

Continued

Further details on the remuneration framework

 

Committee members.

Other features of the remuneration framework

Role-based

allowances

•

  



allowances are determined based on the role and organisational responsibility of the individuals.

Minimum

shareholding

requirement

•



  

 

retention policy.

•

  

  

 

Promotion and New

Hire Awards

•

 



from $A25,000 to $A175,000 depending on the Director level.

Hedging

•

  

(i) shares held to meet the minimum shareholding requirement and

(ii) 

Employment contracts

 

Length of contract Permanent open-ended.

Remuneration

review period

 



participation

  

 

PSU participation  

Termination of

employment



  

Post employment

restrictions

Restrictions include non-solicitation provisions applicable for six months, and paid non-competition provisions

applicable, at Macquarie Bank’s election, for up to three months post-termination.

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Macquarie Bank’s performance

Macquarie Bank’s results

 

2018

(15)

2019

(16)

2020

(17)

2021 2022

NPAT attributable to the ordinary equity holder ($Am) 1,023 1,066 1,297 1,676 2,717

(15)    

operations.

(16)    

operations.

(17)    

operations.

Remuneration Report

Continued

Executive KMP remuneration outcomes for FY2022

 

  



In line with our pay for performance approach to remuneration,

 

 

  

 



 



 

be increased from 1 April 2023.

 

outcomes

There is a consistent and comprehensive process for the Board and

 

KMP during the year to enable them to determine remuneration

outcomes at the end of the year. The Board is always mindful of

the external focus on overall remuneration levels and has spent

considerable time determining remuneration outcomes. The BRC

recognises the range of expectations and has made decisions

that take into consideration the perspectives of all stakeholders.

 

outcomes are aligned both with individual and company-wide

performance and with outcomes delivered to our shareholders, our

clients and the communities in which we operate.

  





documentation that outlines his views of Macquarie Bank’s

performance. The presentation includes a broad range of Macquarie

Bank’s activities covering the following main areas:

•

 

•

risk management and compliance

•

business leadership including customer and

community outcomes

•

people leadership and professional conduct consistent with the

Code of Conduct and What We Stand For principles.

 

 

presentation, together with additional information on matters of

 

 

focus on the management of prudential and regulatory obligations,

and the remediation work underway to strengthen the voice of the

 

   



The Board and the BRC review formal documentation for each





The BRC also considers risk-related matters raised in the

  

To ensure all matters are appropriately brought to the BRC’s

attention and to achieve an integrated approach to remuneration

   



BRC considers remuneration levels for organisations that broadly

operate in the same markets and compete for the same people as

Macquarie Bank.

The MBL Board’s determination of remuneration outcomes



following factors:

•

 

client and community outcomes across all businesses

•

 

demonstrating both an alignment to our purpose and ongoing

  

•

increased cross-collaboration across the Macquarie Group,



in climate solutions and energy transition

•

continued focus on building a diverse, equitable and inclusive

work environment

•

the continued investment in technology and digitalisation

•

role-modelling of and encouragement of behaviours that

support a strong risk culture

•

focus on regulatory engagement, in particular commitment to

strengthening regulatory relationships, prudential compliance

and governance across Macquarie Bank

•

progress against the APRA remediation plan to strengthen the

voice of the Bank. This incorporates the programs of work across

governance, remuneration, risk culture, regulatory reporting,

prudential risk management, and group structure

•



year, there has been a strong focus on enhancements of risk

capabilities and risk frameworks. While we have no systemic

concerns, there have been risk management issues during the

year for which we have imposed remuneration impacts to the



2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

New Executive Committee member

The Board recognises that it is vital to secure the best executive

 

the Macquarie Group in the role of incoming General Counsel. Ms

 

Committees on 2 March 2022.

To secure Ms Bruce’s appointment, the Board determined it was

necessary and appropriate to provide competitive remuneration

arrangements, with consideration of internal peers and external

market comparators. The terms of Ms Bruce’s appointment with

  

$A0.7 million and $A2.6 million for the performance years ending

  



including the retention, forfeiture, and release conditions as set out

on pages 42 to 43 of the Remuneration Report. Ms Bruce will also

receive a minimum PSU allocation of face value $A2.0 million for

 

 

Committee members.

Remuneration Report

Continued

Remuneration governance

 

governance framework are described below.

MGL AND MBL BOARDS

Board Remuneration Committee

Board Risk Committee, Board Audit Committee

 

  

recommendations to the Boards

Discuss any relevant matters that may impact remuneration in a



Strong Board oversight

The MBL Board oversees the application of the remuneration



to assist the Board of Macquarie Bank with remuneration policies

and practices. The BRC currently comprises four independent



Board Remuneration Committee

Chair



Members



M. Roche



The BRC members have the required experience and expertise in

human resources, remuneration and risk to enable them to achieve



has a regular meeting cycle and met seven times during FY2022.

Attendance at meetings by the BRC members is set out in the

   

  

BRC responsibilities

The BRC pays close attention to the design and operation of

 

most senior executives. The responsibilities of the BRC are outlined

 

The Charter is available at

macquarie.com/corporate-governance

Some of the responsibilities include:

•

overseeing the process for the annual review by the Macquarie

 

 

•

recommending to the Board the remuneration outcomes for





•

Remuneration Policy to ensure

compliance with legal and regulatory requirements, as well as to

support the alignment of remuneration with prudent risk-taking

 

•

recommending the Remuneration Policy 

As part of MBL’s previously discussed plan to strengthen its

governance framework, going forward the composition of the MBL

 

 

Alignment to risk

The BRC liaises with the BRiC, BAC and BGCC to ensure there



  

prudent and appropriate risk management.

 

   

  







attendance. The General Counsel attends as required to provide

a further source of independent input, including on matters that

might lead to a malus determination.

Engagement with external stakeholders

The Chairman of the Board and the BRC Chair undertook a series

of meetings with investors and proxy advisors during the year to

 

raised by the investor community.

They also engaged with APRA during the year as part of the

development of the MBL remuneration framework and Macquarie

Group’s implementation plan for the incoming requirements

of CPS 511.

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Independent remuneration review

The BRC has retained Pay Governance as its independent

remuneration consultant, for the use of the MGL Board to

obtain advice on the appropriateness of Macquarie Group’s



The only service that Pay Governance provides to the Macquarie

Group is executive compensation consulting to the BRC. Pay

Governance has not made any remuneration recommendations,

Corporations Act 2001 (Cth) (the Act). The BRC

is responsible for making decisions within the terms of its Charter.

Pay Governance’s terms of engagement set out their independence

from members of Macquarie Group’s management. This year,



•

provided information on global remuneration and



•

considered alignment with shareholder interests

•

 

  

•

considered Macquarie Group’s overall remuneration approach

compared to comparator company organisations.



•

 

framework are similar to those cited by other leading global

investment banks

•

Macquarie Group’s remuneration components support its

  

with practices at other leading global investment banks,

including that performance-based remuneration takes risk

management into account.

Remuneration Report

Continued

Non-Executive Director remuneration

 

  

(18)   

BNC assists the Macquarie Group Board.

Non-Executive Director remuneration



  

have the relevant skills and experience to govern as a member of

the Board.



directors by:

•

 

of the Macquarie Group (including Macquarie Bank), including

risk management and regulatory responsibilities and the global

 

•



commitment required to meet the responsibilities involved in the

annual scheduled calendar, taking into account market rates for

relevant organisations and market trends

•

paying separate fees for additional responsibilities that may arise

on an ad hoc basis

•

delivering these fees in a form that is not contingent on the

performance of the organisation

•

setting a minimum shareholding requirement to align the







 



 

  

 

other than payments relating to their accrued superannuation

contributions comprising part of their remuneration.

 

superannuation contributions over and above the minimum level of

 

 

the maximum aggregate amount approved by shareholders for

this purpose. MGL shareholders approved the current limit ($A5.0

million per annum) at MGL’s 2019 Annual General Meeting. The



including any fees as Board members of MBL, does not exceed this

shareholder approved maximum amount.

MBL has a Board Audit Committee and a Board Risk Committee that



Governance and Compliance Committee and Board Remuneration

Committee assist both Boards.

Board and Committee fees are reviewed annually.

(18)

The Board



factors, including trend and peer analysis of Australian and

  



growth in the scale of MBL’s operations and regulatory initiatives

that have increased the responsibilities and time commitment of



Board member base fee from $A78,000 to $A137,500 and the Board

Chairman fee was also increased from $A267,000 to $A467,500. The





 

Fees were allocated to MBL for FY2022.

MBL Annual Director Fees

Chairman Member

$A $A

Board 467,500 137,500

Board Risk

Committee (BRiC)

40,000 18,500

Board Audit

Committee (BAC)

40,000 18,500

2022 Annual Report

Further InformationFinancial ReportAbout Directors’ Report

Appendix 1: Key Management Personnel (KMP) for FY2022

  Related

Party Disclosures  



    

Management.

Name Position Term as KMP for FY2022

Executive Voting Director

S. D. Green   



  



S.R. Wikramanayake   Full year

Non-Executive Directors

 Independent Director Full year

G.M. Cairns Independent Director Ceased to be a member of the Board on 7 May 2021

 Independent Director Full year

 Independent Director Full year

 Independent Director Ceased to be a member of the Board on



 Independent Director  

 Independent Director Full year

M. Roche Independent Director Full year

G.R. Stevens AC Independent Director Full year

(19)

 Independent Director Full year

 Independent Chairman Full year

(20)

Executives

(21)

G.N. Bruce   

A. Cassidy   



  Full year

  Full year

N. Sorbara  Full year

P.C. Upfold  

31 December 2021

G.C. Ward   Full year

(19) 

(20) Mr Warne will retire as a Director and Chairman of the MGL and MBL Boards on 9 May 2022.

(21)  

Remuneration Report

Continued

Appendix 2: Executive KMP remuneration disclosure



  

Salary (including

superannuation)

Performance related

remuneration

Total short-term

 

Restricted

 

 

years’ restricted

 

Total long-term

   PSUs

Total

share-based

payments

Total

Remuneration

Percentage of

remuneration that

consists of PSUs

Name Position Year $A $A $A $A $A $A $A $A $A $A $A

Executive Voting Director 

S.R. Wikramanayake   2022 412,311 2,485,000 2,897,311

994,000 696,423 1,690,423 5,792,292 1,412,338 7,204,630 11,792,364 12%

 2021 396,677 2,143,821 2,540,498 857,528 (385,592) 471,936 5,111,530 452,187 5,563,717 8,576,151 

Other Executives 

  2022 435,179 1,708,100 2,143,279

256,215 80,245 336,460 2,118,680 997,433 3,116,113 5,595,852 18%

  2021 337,498 1,246,840 1,584,338 187,026 (10,540) 176,486 1,751,581 516,769 2,268,350 4,029,174 

  2022 616,993 12,112,600 12,729,593 1,816,890 360,079 2,176,969 10,967,366 1,754,844 12,722,210 27,628,772 6%

  2021 684,075 8,542,273 9,226,348 1,281,341 (29,128) 1,252,213 9,250,782 1,073,559 10,324,341 20,802,902 

N. Sorbara  2022 545,611 2,128,600 2,674,211 319,290 100,141 419,431 2,642,305 1,257,621 3,899,926 6,993,568 18%

  2021 514,341 1,671,319 2,185,660 250,698 (15,067) 235,631 2,332,022 203,896 2,535,918 4,957,209 

G.C. Ward   2022 771,594 3,600,000 4,371,594 1,080,000 381,019 1,461,019 4,408,060 2,084,601 6,492,661 12,325,274 17%

 2021 771,319 3,220,000 3,991,319 966,000 (53,515) 912,485 4,309,959 303,992 4,613,951 9,517,755 

 

(22)

2022 2,781,688 22,034,300 24,815,988 4,466,395 1,617,907 6,084,302 25,928,703 7,506,837 33,435,540 64,335,830

 2021 2,703,910 16,824,253 19,528,163 3,542,593 (493,842) 3,048,751 22,755,874 2,550,403 25,306,277 47,883,191

New and Former Executive Voting Directors

S.D. Green

(23)

 2022 531,131 750,000 1,281,131 112,500 19,704 132,204 581,267 345,580 926,847 2,340,182 15%

2021 – – – – – – – – – 



(24)

 2022 125,773 – 125,773 – 27,423 27,423 4,118,505 1,259,090 5,377,595 5,530,791 23%

2021 620,895 1,508,000 2,128,895 226,200 (15,730) 210,470 4,874,638 584,132 5,458,770 7,798,135 

New and Former Other Executives

G.N. Bruce

(25)

 2022 94,182 147,188 241,370 22,078 – 22,078 14,517 37,239 51,756 315,204 12%

  2021 – – – – – – 

A. Cassidy

(26)

 2022 81,234 148,400 229,634 22,260 1,682 23,942 74,176 60,161 134,337 387,913 16%

  2021 – – – – – – – 

P.C. Upfold

(27)

 2022 330,841 1,038,800 1,369,641 155,820 57,111 212,931 2,471,116 760,774 3,231,890 4,814,462 16%

  2021 398,426 1,351,474 1,749,900 202,721 (14,710) 188,011 1,979,352 164,876 2,144,228 4,082,139 

Total Remuneration – Executive KMP

(including new and former executives)

2022 3,944,849 24,118,688 28,063,537

4,779,053 1,723,827 6,502,880 33,188,284 9,969,681 43,157,965 77,724,382

2021 3,723,231 19,683,727 23,406,958 3,971,514 (524,282) 3,447,232 29,609,864 3,299,411 32,909,275 59,763,465

(22)  

(23)  

(24) 

amortisation related to her equity awards was accelerated resulting in further accounting amortisation of $A4.1 million included in her FY2022 statutory remuneration.

(25)   

was necessary and appropriate to provide competitive remuneration arrangements. The terms of Ms Bruce’s appointment with the Macquarie Group included awarding minimum

    

  

 

table for Ms Bruce represent remuneration since her date of hire.

(26)  

(27)   

As a result of his intention to retire, the amortisation of his equity awards is being recognised over an accelerated vesting period. $A1.7 million of his FY2022 statutory

remuneration represents accelerated amortisation of equity awards, with further accounting amortisation being recognised of $A2.8 million and $A2.7 million in FY2022 and

 