(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Antony Currie MELBOURNE, July 25 (Reuters Breakingviews) - How much should a bank dock the CEO's pay after a string of, at times, persistent regulatory failures? Macquarie boss Shemara Wikramanayake and her board have just discovered that 5% is not enough. At Thursday's annual general meeting, just over 25% of shareholders, including California pension giants CalPERS and CalSTRS, voted against the $54 billion Australian firm's executive compensation. It's yet another sign the financial powerhouse isn't taking its problems seriously enough. Macquarie had flagged the drop in Wikramanayake's package to A$24 million ($15.8 million) back in May, when most of the transgressions were already public. So there was plenty of time to defend it. Yet the bank still received the highest protest vote it has suffered on pay. In the U.S. and elsewhere, losing the support of a quarter of investors is usually taken as a humbling slap to buck up your ideas. In Australia, there's an extra sting: if 25% of shareholders or more tick no on the ballot paper two years running, they can elect to call a vote to oust the entire board. The prospect of having that threat held over them helps explain why Wikramanayake took to the phones ahead of the meeting to try to persuade shareholders to give their backing, the AFR reported, citing sources. That's usually the job of the chair—in this case, former Reserve Bank Governor Glenn Stevens. Granted, the issues that have gotten the bank into trouble with the Australian Securities and Investments Commission aren't heinous. It has not been accused of misleading clients or committing fraud. Instead, the watchdog has dinged it for compliance function failures, from over-the-counter derivatives to electricity futures to misreporting the number of shares underlying short-selling transactions. And, often, Macquarie employees were the ones to spot and report the issues. Trouble is, the problems keep arising. ASIC has come knocking four times in the past year or so over the various issues and in May decided to sue the bank over its short-sale missteps, having raised these with executives several times since 2015. That suggests either complacency or, worse, hubris has infected the bank that has enjoyed a long run of enviable financial success. Of course, Macquarie could always withdraw more from Wikramanayake's compensation this year. But its initial reaction seems to reinforce a growing negative perception. Follow Antony Currie on Bluesky and Linkedin. CONTEXT NEWS At Macquarie's annual meeting on July 24, just over 25% of shareholders voted against adopting the bank's remuneration report. The revolt follows a string of regulatory failures. Proxy advisory firms Glass Lewis and Ownership Matters both recommended a vote against the report. If more than 25% of shareholders vote against an Australian company's remuneration report for two years running, shareholders can hold another vote on whether to dismiss the entire board. On the same day, Macquarie said that its profit for the most recent quarter was lower than the same period last year and that Alex Harvey, CFO for the past eight years, is to retire at the end of the year. He was regarded as a potential successor to CEO Shemara Wikramanayake, who has been in the top spot since 2018. The bank did not disclose specific profit figures in the limited trading update. Shares closed down more than 5% at A$213.84 on July 24. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Macquarie's woes have weighed on its shares this year https://www.reuters.com/graphics/BRV-BRV/zgvoznmzqpd/chart.png ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Una Galani; Production by Ujjaini Dutta) ((For previous columns by the author, Reuters customers can click on mailto:antony.currie@thomsonreuters.com)) Keywords: MACQUARIE GROUP RESULTS/BREAKINGVIEWS (REPEAT)
