Annual Meeting Report, April 6th 2022
Click here for NZSA Assessment and Voting Intentions
The Chair, James Miller, opened the meeting with a video showing the new Auckland Office and introducing the Board and senior executives. He outlined the changes over the past four years with the creation of Smartshares and Wealth Technologies businesses and the establishment of the joint venture with the Singapore Exchange and the launch of the NZX-SGX Dairy Derivatives Strategic Partnership late last year.
Mark Petersons term as CEO has been extended to April 2024 and James Miller, whilst standing for re-election, will retire at the 2023 ASM. This will allow the new Chair to be involved in the CEO replacement process. John McMahon has resigned from the Board due to his other workloads and Peter Jessup, a former employee some years ago, has been appointed to the Board. The Board appointed its fourth Future Director Victoria Newman. (NZX is to be congratulated for its ongoing support of this important programme).
NZ RegCo has now completed 18 months of operation. This standalone, independently governed regulatory agency performs all NZX’s frontline regulatory functions and has been very well received by the New Zealand capital markets.
The resolution around increasing the Directors Fee Pool was covered in some detail. The current Pool had been set in 2003. The proposal was to set the Pool nearer to the market median and then move to the median provided the company’s performance was appropriate. It was proposed that 50% of the increase would be used by Directors to purchase shares each year.
Guidance for FY22 was $33.5 million to $38 million, but it was noted there was volatility in the market and a general tightening of market conditions.
Mark Peterson outlined the FY21 results and said that NZX was aiming to be the Home of the Capital Markets. New capital listings were a high priority with several during the past year. The aim is to build liquidity with new products like NZX20 Futures. It was noted the on-market liquidity levels averaged 62% and the objective was to grow this to 70% to 80% over the next 5 years. Capital raisings were $19.8 billion the highest since 2016.
Director Fee Pool Changes
The resolution around the increase in the Directors Fee Pool attracted some (sometimes polarising) questions and comments.
NZSA asked if the previous Fees had impacted succession planning or played a part in past resignations. Whilst the answer was somewhat vague there was a suggestion that this had been the case.
One shareholder asked if the Board could justify the increase based on the past dividends and share price.
Another said that Directors should not get an increase as shareholders haven’t been rewarded.
Under General Business, there were questions and comments around the recent capital raise in relation to retail shareholders. The objective was to allow retail and institutional shareholders to participate equally -however, market events had intervened resulting in a lower take up by retail shareholders.
The ASB acquisition will be positive as regards earnings as will the Dairy trading platform.
One shareholder commented that the TV news no longer contains any reference to the capital markets. Whilst its not possible to control what the TV channels cover the company uses a range of social media platforms to help people understand the markets.
There was comment around the $1,000 minimum holding. This only relates to new company listings. Companies can have a minimum parcel holding in their Constitutions.
Will the dividend be maintained at its current level? The Policy is to pay 80% to 100% of earnings over a period looking at the past and the future. It is expected that FY22 dividends will be 110% at 6.1 cents per share but the ratio will reduce over time with increased earnings.
In response to a question around IT capital expenditure the IT systems have an 8-year cycle for upgrading and replacement.
Following a comment from a shareholder around the clashes of ASMs and SSMs as regards dates and times, NZSA questioned whether NZX could establish and maintain a first come first served calendar and require companies to submit their meeting dates to avoid clashes. It was pointed out that companies have a responsibility to ensure their shareholders can attend meetings. The Chair agreed there was a problem and asked the Team to look at the suggestion.