Principle 8
Remunerate fairly and responsibly
Below is a brief description of management and performance fee arrangements for the MQA Manager remuneration arrangements in relation to Macquarie staff who work on MQA (whose remuneration is paid by Macquarie, not MQA) and also the fees paid to MQA external directors. Full details and a discussion of MQA remuneration arrangements, alignment of interest and manager and staff incentives are set out in the remuneration report included with MQA’s annual financial statements.
1. MQA Manager fees
The MQA Manager as manager of MARL and adviser to MARIL is entitled to be paid base management fees and also performance fees for discharging its management/advisory functions.
These fees are calculated in accordance with a defined formula under the management and advisory agreements. The fee arrangements were fully disclosed to investors on fund inception and were voted on and approved by security holders at the time as part of the MIG restructure proposal. They will continue to be disclosed on the MQA website and in annual reports. The structure and level of the fee arrangements are consistent with those paid in the market in respect of similar externally managed vehicles and are not subject to review.
Any changes to the fee provisions which would have the effect of increasing the fees would need to be approved by investors.
2. Reimbursement of responsible entity and adviser expenses
The MQA Manager is entitled to be reimbursed for expenses incurred by it in relation to the proper performance of its duties, out of the assets of MQA. This includes routine ongoing expenses such as the third party costs of acquiring businesses and managing them, as well as capital raising costs, registry, audit, insurance, compliance costs and other expenses as set out in the MQA Management Agreements.
3. Staff remuneration
The MQA Manager makes available employees, including senior executives, to discharge their obligations to the relevant MQA entity. These staff are employed by entities in Macquarie and made available through resourcing arrangements with the MQA Manager or the Macquarie entities who are sub-advisers to the MQA Manager. Their remuneration is not a MQA expense. It is paid by Macquarie. Instead MQA pays management fees to Macquarie for providing management and advisory services. These fees are MQA expenses and will be disclosed in the remuneration report. Neither MARL nor MARIL have employees at the parent level and rely on the MQA management staff under the management and advisory agreement arrangements to implement operational decisions and carry out administrative functions.
MQA holds its toll road businesses through interests in special purpose project vehicles. Most of these vehicles have their own internal management paid for at the business level. Where MQA Manager staff are required to serve as directors on the boards of these vehicles, or are seconded to them from time to time, any fees paid in respect of these arrangements are paid to MQA.
4. Director remuneration
MQA independent and non-executive director fees are paid by the relevant company. No director fees are paid to John Roberts, the director originally nominated by Macquarie. None of the MQA directors is entitled to MQA options or securities or to retirement benefits as part of their remuneration package.
5. Remuneration committee
The boards of MARL and MARIL have each constituted a remuneration committee with a similar composition to the respective audit and risk committees i.e. Richard England (Chairman), David Walsh and Jeffrey Conyers for MARL and Derek Stapley (Chairman), Jeffrey Conyers and David Walsh for MARIL. The MARL and MARIL remuneration committees have each adopted a formal remuneration committee charter in accordance with the requirements of ASX Listing Rule 12.8 and for the purpose of discharging the responsibilities of the boards relating to the compensation of MQA’s key management personnel (as defined in Accounting Standard AASB 124 Related Party Disclosure).
In particular the remuneration committees have overall responsibility for recommending the remuneration, if any, of the MQA directors in their role as a director and chairman or member of any committee or subcommittee of the board, as the case may be.