This meeting properly constituted and open. Charter Hall acknowledges the traditional owners of the lands on which we work and gather, and we pay our respects to elders past and present. This afternoon, I'll provide a brief overview of the business and the achievements during financial year 2023, and our Group CEO, David Harrison, will then provide an update on our business and key results, as we're as well as reaffirming our outlook for the financial year 2024. We'll then move to the formal business of the meeting, and the resolutions that were in the Notice of Meeting for your consideration. There are five items of business and five resolutions for your consideration today.
The first resolution involves the re-election of directors, and when the time comes, I'll ask each director to say a few words and provide some personal background, and the reasons they believe they should be re-elected. Three of the other resolutions relate to the approval of the remuneration report and the issue of service and performance rights to the CEO, David Harrison. There'll also be an opportunity to ask questions of the directors on each resolution, and I will ensure that there's adequate time after the formal resolutions are dealt with to address any issues that security holders would like to raise. I'll now introduce to you my fellow non-executive independent directors.
Immediately on my left is David Ross, who is Chair of the Remuneration and Human Resources Committee, a member of the Audit, Risk and Compliance Committee, and the Investment Committee, and he's also standing for re-election today. We have Jacqueline Chow, a little bit further along the table there, who's a member of the Audit, Risk and Compliance Committee, and the Nominations Committee. Karen Moses, immediately here, who's Chair of the Audit, Risk and Compliance Committee, and a member of the Remuneration and Human Resources Committee, and Nominations Committee. We have Greg Paramor, down the end there. Greg Paramor AO, who's a member of the Remuneration and Human Resources Committee, and the Nomination Committee, and Chair of our Investment Committee.
Stephen Conry, AM, who's a member of the Investment Committee and Remuneration and Human Resources Committee, and he is standing for election today. And finally, I'd like to introduce our Managing Director and Group CEO, David Harrison. As you would expect, also present today, we have, Mark Bryant, our Company Secretary, and we have Ewan Barron from our auditor, PricewaterhouseCoopers, who will be available to answer any questions in respect of the audit of our financial statements, from you, the security holders. So the financial year, 2023, saw economies across the globe come under pressure. As we all know, supply chain disruptions lingered, and high inflation drove the RBA to increase cash rates at a historical pace. The effects of this environment were widely felt, and the property sector was no exception.
However, at Charter Hall, we've always highlighted the importance of resilience and operating a sustainable business model that can withstand the property cycle. We're pleased to have yet again proved the strength of our underlying business, delivered strong financial and operating results. We delivered AUD 0.933 per security in operating earnings, which was ahead of our guidance of AUD 0.90 per security, and we paid security holders a distribution per stapled security of AUD 0.425. Earnings decreased compared to last year, in large part due to fewer performance fees being payable. However, over the longer term, we've consistently delivered earnings growth for investors with a 10-year compound annual growth rate of 15.1% of operating earnings per security.
It's important to note that our performance in a challenging market should not be seen as a given. It's a result of the experience of the management team and the board, taking a long-term view and recognizing the cyclical nature of the industry in which we operate. Your board's got an excellent mix of experience in both real estate cycles and economic cycles, meaning that we're acutely aware of the impact those cycles have on our business. When the market was strong, we were actually planning for the slowdown that inevitably comes when you're in a cyclical business. As the market grows higher, you actually understand that there will be a period on the other side of that cycle when things aren't quite so good. We focused on ensuring our portfolios are resilient, with high occupancy and properties that are leased to the highest quality tenants.
So take, for example, our office portfolio. That is 96.3% leased, occupied, compared to the national average of 85%, while our industrial and logistics portfolio is 99% occupied, and our social infrastructure portfolios are 100% occupied. Our retail portfolio, 98.6% occupied. That's how we build in resilience to the portfolio. Our leasing teams have actually been the real heroes of the past year, with our office leasing team leasing up 388,000 sqm of office space during the course of the year. Our industrial leasing team doing close to 1 million sqm of industrial space during the course of the year. Our focus on high-quality tenants on long-term leases has further strengthened the foundations of the business, with our top 20 tenants making up almost 60% of our platform rent.
Our approach is to partner with leading companies in each industry and seek to, and end up being their property partner. So as a result of this approach, tenant customers leasing more than one asset from us make up 65% of our total platform rent income. 72% of tenants are also repeat customers, and 28% of tenants lease across more than one of our sectors. Sectors being largely office, industrial, logistics, and retail, and social infrastructure. Another one of our strengths is a deep understanding of the responsibility we have to investors. We take pride in the custodianship that we have across our investor capital, and that fuels ambition to grow along with those investors in a financially prudent way. What's an example of that? How does it manifest itself?
This has resulted in a boost in exposure to triple net leases, which are currently 26% of our platform leases, and CPI-linked leases, which make up 21% of the platform net income. These provide strong rental growth and capital-efficient portfolios for our investors. With a debt book of about AUD 30 billion across domestic and international bank and capital markets, our ability to access markets is critical and a distinguishing strength of this business. So across the group, average gearing is approximately 33%, with average interest rate hedging levels approaching 60% of that debt that's drawn. So the business continues to diversify its debt capital sources and will access bank and capital markets as appropriate.
In recent months, we've accessed a very substantial debt market in Asia for an amount in excess of AUD 1 billion, all on what you would call good and reasonable terms. So there is no shortage of appetite willing to engage from debt providers with Charter Hall. Further enhancing our strength is our approach to ESG, which has driven sector-leading results, enabling us to further align our objectives with our customers as we work together to achieve more sustainable outcomes and have an enduring impact on our communities. We've accelerated our commitment to net zero in operations, in terms of Scope 1 and Scope 2, from 2030 back to 2025. So we've brought forward the achievement of that net zero carbon goal by five years.
This is an enormous achievement and is a direct reflection of how we leverage our scale to deliver platform-wide efficiencies, as well as the actions of our people in creating better environmental outcomes. Since 2017, we have achieved an absolute reduction of 61% in Scope 1 and Scope 2 emissions, and remain on track, as I said, to meet that net zero target by 2025. It's important to note that we haven't actually achieved this all by ourselves. It's in large part a result of our strong track record of partnering with tenant customers, as demonstrated by the sixty-three megawatt of solar already established across our portfolio.
We'll pursue further opportunities to partner with our tenant customers and supply chain partners on emissions and reductions initiatives, especially as we work towards Scope 3 emissions reduction targets. This year, we undertook another AUD 900 million of sustainable finance transactions. I believe we're now up to over AUD 3 billion of that AUD 30 billion in sustainable finance transactions. And that recognizes the ESG performance of our assets and the attractive environmental credentials, and it also enhances our access to capital. In our community partnerships, we're focused on driving lasting change by partnering where we can have the greatest impact. So in line with our pledge to 1% commitment, we donated over AUD 1.4 million this year in disaster and hardship grants.
We also facilitated just over 200 employment outcomes in partnership with social enterprises, as part of our goal of providing 1,200 employment outcomes for people facing hardship by 2030. We also saw a record year for volunteering by our people. Finally, our culture has long been one of our key strengths, so our employment engagement remains high. In fact, nine percentage points above the Australian norm, at 89%, with 93% of our employees saying that Charter Hall is a great place to work. So in the year ahead, this year, FY 2024, we'll continue to focus our strategy of using our combined expertise to access, deploy, manage, invest, and create value, and generate superior returns for security holders. However, we do acknowledge that challenges remain in the year ahead.
As such, your board and management team see this as a time to stay close to our investors, both existing and prospective, so to maintain open dialogue, accessibility, and transparency in deepening those relationships. This approach ensures that once the market normalizes and asset prices become more certain, we will be poised to capitalize on the pipeline of opportunities that we've identified. So on behalf of myself and the board, I'd like to thank our tenant customers, 'cause they pay the rent, our investors and security holders for their ongoing support. I extend my gratitude to my fellow directors and executive team for their dedication, and to all our people for their efforts. And as together, we continue to build a remarkably sustainable business we can be proud of.
It's now my pleasure to introduce the Managing Director and CEO, David Harrison, to give his update. Thank you.
Thank you, David. Look, as David just highlighted, financial year 2023, you know, obviously presented some economic challenges, with no doubt, the rapid increase in interest rates and the rising cost of debt affecting the outlook for many businesses. However, our focus on resilience, diversification, and partnership allowed us to deliver inning-- Sorry, innings, thinking of the cricket. Earnings, above our initial guidance, at the start of FY 2023. We delivered operating earnings post-tax of AUD 441 million, or AUD 0.933 per security, 3.7% above our initial guidance. Those earnings equate to a return on contributed equity of 23.8%, a metric we continue to believe is important, for our long-term shareholders.
Notwithstanding the challenging environment, FUM continued to grow during FY 2023, up 9.4%, for the year to AUD 87.4 billion, driven primarily by property funds under management growth of 9.5%, or about AUD 6.2 billion, to AUD 71.9 billion. That growth saw us undertake AUD 10.4 billion of gross transactions as we continued to actively curate our portfolio to drive performance via acquisitions, divestments, and developments. I note we actually sold AUD 2.8 billion of assets in that financial year, nearly double our average for the previous three or four years. The group's balance sheet remains robust, with 2.2% net gearing at 30 June, and we continue to maintain significant investment capacity at both the balance sheet level and across the platform.
FUM growth for the year was driven primarily by net acquisitions of AUD 4.8 billion. That's acquisitions less divestments. Development expenditure of AUD 3 billion, predominantly across industrial and office. But however, that was offset by devaluations of AUD 1.6 billion during the year. As the market and passing rental growth in our portfolio helped lessen the impact of 40 basis points of cap rate expansion across the platform, which I also note was predominantly in the second half of that financial year, so six months to 30 June 2023. We continue to remain well diversified by both equity sources and multi-sector market penetration that amplifies an opportunity, or our opportunity, set in pre-leasing and sale and leaseback investments.
Our development capability continues to be a key strategic advantage, a significant contributor to FUM growth, and drives enhanced returns for our fund investors. The success of the platform in driving enhanced returns for investors has been driven by all of our completed projects being profitable, delivering yields on cost and enhanced IRRs above stabilized returns. Our scale and diversification continue to be key drivers of our performance and resilience, and our ability to unlock value. We have a focus on delivering a sustainable and resilient return for our investors, and our carefully curated portfolio of more than 1,600 properties across our core sectors, delivers more than AUD 3.25 billion of net rental income.
Our platform WALE of 8.2 years, or weighted average lease term to expiry, is evidence of our focus on acquiring high-quality assets, developing high-quality assets, that attract strong tenant covenants secured on attractive leases. The weighted average cap rate across the platform of 4.76% at June 30, together with a 3.7% annual weighted average rent review, provides modest but growing returns for our investors as we continue to modernize our portfolio and reduce maintenance CapEx and obsolescence risk, something that we think will become more important over the next couple of years. We also see the quality of our tenant covenants as a key competitive advantage versus many of our peers, an example of our focus on building resilient portfolios. As David mentioned, our top 20 tenants make up almost 60% of platform net rent.
These tenant customers also include a high proportion within essential non-discretionary industries. We've spent the last decade building our portfolios to focus on these resilient tenants and industries, knowing that economic cycles are always volatile. Within this strategy, we also embedded further resilience into our portfolios through triple net leases, which make up 26% of the platform, as well as 21% of the platform net rent being linked to annual CPI escalations or CPI plus escalations. As I mentioned, market and passing rental growth has partly insulated the impact of rising cap rates. This is true across all property sectors. Across our industrial and logistics portfolio, we see our passing rents being well below market levels, so it provides strong rental reversions as those market review opportunities emerge.
With demand outpacing supply and industrial, an influx of net migration into Australia, driving a surge in population growth, we expect, and the continued rise of e-commerce, we do expect the rental growth to continue in the industrial sector for some years. In office, also, it may surprise some that we see our passing rents being below market levels, and we're seeing a bifurcation of tenant demand accelerating towards modern or modernized assets. In our Long WALE retail portfolio, most of the leases are triple net, therefore we've got minimal CapEx, even structural repairs and maintenance, but they are all linked to uncapped CPI reviews, so that when we have the strong period of CPI growth we have had for the last two or three years, we've been benefiting that with strong rental growth.
Shopping centers continue to be a very resilient part of our portfolio. We've got one of the most affordable occupancy levels at 10%-11% across our shopping center portfolio, which is providing rental growth and resilience within that part of our portfolio. In social infrastructure, our childcare portfolio and other social infrastructure assets are generating rental growth from a combination of fixed reviews, CPI-linked reviews, and market rental growth. So this means at a group level, we're continuing to see our net property income line grow, and in certain sectors it'll grow faster than others. But overall, we're seeing positive trajectory of our rental growth.
It's important that we maintain our strong relationship with our tenant customers and prospective tenant customers, so we can maintain very high occupancy in all of our sectors, where in most cases, we're sector-leading occupancy levels, particularly in office. In FY 2023, we also actively deployed equity into developments and acquisitions, with net transactions of AUD 4.8 billion, as I mentioned earlier, and gross transactions of AUD 10.4 billion. Our strong tenant relationships continue to provide us with access to off-market sale and leaseback transactions, which have continued into FY 2024, particularly in the industrial sector. We've undertaken multiple recent sale and leaseback acquisitions, with CPI-linked rent reviews a key element of those acquisitions.
Portfolio curation will continue, combining both divestments and acquisitions, as we actively manage the portfolios to optimize returns for our investors and maintain gearing within our target ranges. Equity flows last financial year were predominantly linked to our pooled and wholesale partnerships, as these investors continue to support the opportunities that we provide to them. These flows have slowed due to rising interest rates, particularly in our direct funds, as retail investors are unsurprisingly more directly impacted by the short-term impact of rising interest rates. We continue to have significant investment capacity within our funds and at the group balance sheet. We believe that going forward, economic conditions will provide unique opportunities to acquire assets, and as we have done many times over the last 20 years as a listed entity, we will access our external partners to take advantage of those opportunities.
Turning to guidance, I'd like to reiterate that based on no material adverse change in expected market conditions, FY 2024 guidance is for post-tax operating earnings per security of approximately AUD 0.75 per security. FY 2024 distribution per security guidance is for a continued 6% per annum growth over FY 2023 distributions. In closing, I would like to thank our people around Australia, our customers, and of course, our investors, for continued support. And certainly from our management team, the hard work and dedication they've continued to provide to delivering to both our tenant customers and our investors, and obviously our shareholders. On behalf of our senior executive management team, I'd like to thank our security holders for their continued support. Thank you.
Thank you, David. In the past meetings, what we've done is, we've moved at this stage immediately into the formal part of the meeting, but I thought this time we might actually throw it open to general questions that may have been, or may have come out as a result of, either my address or David, David Harrison's address. There will be an opportunity, and during the formal part of the meeting, to ask questions on any of the specific resolutions. And also, I'll make available an opportunity at the end of the meeting if there's anything that anyone would like to raise in the meeting. And of course, there will be the board and executives around post the meeting, if you would like to engage individually on, on specific issues that you'd like to discuss.
At this stage, are there any questions from investors here today that they would like to ask?
... Thank you. Charlie Kingston, K Capital. Firstly, congratulations to the manager on delivering a very good outcome for CHC shareholders over the long term. Appreciate it's been a tough 12 months, but the long-term performance has been very good from the manager. You've grown fees, you've grown FUM. All the metrics are very positive, so well done. However, I am concerned about that growth in... It has potentially come at the expense of the REITs and some of the funds in which you manage. Now, for context, CLW being your largest REIT, that IPO'd at a price of AUD 4. Today, it trades below AUD 3.50, nearly eight or so years later. Now, over that timeframe, the fund itself has grown significantly. There's been very large acquisition fees every time that fund grows.
The fees paid to the manager from that fund, I believe, are up circa three times. So clearly that has not been a good outcome for the shareholders of CLW. Great outcome for the manager, well done, but CLW shareholders, not a great outcome. Likewise, CQR, that, that's your second biggest REIT. That has produced a negative over 10%, capital loss for shareholders over the past 10 years. Over that timeframe, the fees paid to the manager have nearly doubled. The operating earnings per share, the only real metric that investors care about, is below the 2016 level. So again, not a good outcome for that REIT, the fund in which you manage, but a great outcome for the manager. Lastly, there's a lot of, or some unlisted funds, again, they can't redeem...
Investors can't redeem their funds, yet fees continue to be charged, so not a good outcome for those investors. But I'm really concerned about the REITs, given their poor performance, whereas the manager has benefited. It seems to be a case of this is an example whereby the manager is getting rich from its investors, not with their investors. Now, I appreciate Charter Hall, the manager, is a co-investor in these funds, in these REITs, but I think we can all agree that the acquisition fees, the increase in recurring fees far outweighs any sort of capital loss you've taken on those co-investments. So I am just concerned about how sustainable this is. Again, I appreciate that REITs are under pressure. I'm sure you may argue that interest rates have gone up, so all REITs are struggling.
But CLW in particular, that gearing is very high. The market is clearly worried about that gearing. It's speculated, and I think you've suggested that you will be selling assets, potentially at an inopportune time, to pay down that gearing, and as a consequence, that has one of the largest discounts to NTA on the ASX. So that certainly is in your control when you buy and sell assets and the level of gearing, so I wouldn't accept that as a potential explanation for the poor performance. But that was my question. You know, again, well, well done for growing CHC as a manager, but I do just worry how sustainable that is if you can't deliver a good outcome for your investors to, who reach out back to you.
Because we've all seen, you know, managers, Magellan, Platinum, if you don't deliver a good outcome for your, or the funds that you manage, the value of the manager will get absolutely smacked. So that is my concern. I just appreciate your thoughts on going forward, how you can actually make it more of a win-win scenario, whereby if the manager wins, then the funds in which you manage also get a good outcome. So appreciate your thoughts on that. Thank you.
Thank you, Charlie. I might make a couple of high-level remarks, and then I'm going to ask David Harrison to respond, because it's a broad range of a question. I think, in respect of, CLW, I think if you look at the underlying real estate, you look at the leases, you look at the occupancy, you look at the cash flows that come off, that business, they're very strong. It is typical in an occasion like this, where equity markets will overshoot. They tend to overshoot on the upside. They'll overshoot on the downside. We stay connected to, the CLW, security holders. They understand that there will be some sensible sale of assets in order to reduce the gearing, and that is accepted.
No one is... And I believe they would be poorly served by some sort of rushed sale of assets. So I might stop there and ask David Harrison to respond. I think there's two parts to the question. There's a general question about the performance of the REITs and how that might impact us as Charter Hall Group, because this is a Charter Hall meeting, not a CLW or CQR meeting.
Yeah. So, I might start with the direct business. There's been a lot of media attention around funds that are taking more time than instant liquidity, and I would say that we are not alone in progressively paying out redemptions on sort of five- or seven-year windows. I'd also say that none of our funds have suspended distributions, so our investors are still getting distributions in their funds. We've just finished a liquidity review for a diversified fund called Long WALE Fund, and
... investors have been advised that they will be, you know, paid their redemptions in due course. PFA is an office fund. Office is going through a pretty tough time. I think every one of the RE boards in the platform is not going to fire sale assets, and we will go through an orderly divestment program to provide the liquidity to the investors. In relation to the REITs, I think you mentioned it, Charlie, we are by far the biggest investor in any of the REITs, so I think the institutional and retail investors that we talk to like that alignment. I don't necessarily agree that the fees outweigh such a significant investment of 10 or 11% of the register.
So, I think the alignment of Charter Hall, and you mentioned CLW, it's by far our biggest balance sheet co-investment in any fund, and we have funds that are a lot bigger in scale than CLW. There's no point having a relative discussion about the performance of the REIT sector. The I've been doing this for 35 years, and every time interest rates rise, REITs get impacted. It's been one of the more difficult GICS sectors globally. But as you've seen in the last couple of days with the U.S. inflation print and office rates in the U.S. went up 13% in a day, it's very volatile. The listed market is much more volatile, always has been than, you know, the direct market. So I think we are continuing.
I think the Chair of CLW made it pretty clear at the AGM, that the board's committed to an orderly divestment program. As David Clarke said, we would, in our opinion, CLW has got one of the highest quality portfolios of any major manager in the country. The NPI growth line, the lack of income risk, and the fact that 50% of the income is linked to uncapped CPI, provides, you know, a pretty solid base, for steering through, you know, the, you know, this difficult period. The other thing I'd say is that, you know, it, the portfolio has been curated such that there's a variety of small assets and larger assets in a whole range of different sectors. Office is less than 15% of the total portfolio.
The majority of the CLW portfolio is in industrial and triple net Long WALE retail assets, social infrastructure, all of which we think are gonna provide some liquidity. So, that's really how I can respond to your question. I don't necessarily agree that there's a structural misalignment. We are in the REITs as the largest investor, virtually in every one of them, CQE, CQR, and CLW. So, I think if you're a shareholder of Charter Hall Group, I think you do believe that CHC is strongly aligned to its funds, and we'll continue to prosecute that model as we have for the last 20 years.
Thank you, David. All right.
Just one more question. Just, just going forward, I suppose, growing the, the manager, again, well done. You, you grew it significantly, in, in previous years, but again, a lot of that growth has come from the REITs and some other funds that are now essentially an outflow. Just appreciate your thoughts as to going forward, do, do you feel like you may have grown, grown too hard in the sense that now, again, a lot of your listed funds are, are, are sellers of assets, potentially at not the best time, when we could get some really good opportunities going forward, given higher debt costs, so there, there could be some forced selling?
But, do you see yourself as that go-to manager who can capitalize on the opportunities going forward, or are you sort of hamstrung in the sense that your REITs are selling assets, some of your funds are selling assets? So just hoping to get your thoughts on going forward, is Charter Hall gonna be the manager of choice to capitalize on any sort of distress or good opportunities in the market?
Why don't I just, again, make some remarks, and then David can follow on? So the first of all, I'd say, absolutely not. I mean, I think the developed world is actually searching for where peak interest rates are. So, we think we find them every now and again, and the world gets quite excited, and then we find that actually inflation is not as under control as perhaps we first thought. But nevertheless, I think we are getting close to that point of peak interest rates. It's - we're near or near about. And David referenced just yesterday, what happened when the market actually thought it was, somewhere close to that point, which created a rally, in stocks like ours.
So, to your point about whether we're hamstrung as a result of where we find ourselves, absolutely not. We've got a significant set of capital resources, so a combination of cash and available debt, I think is around about AUD 6 billion available to us now. We have made a real point of staying exceptionally close to our, particularly our international institutional investors, who see Australia as one of two preferred destinations in their Asia Pacific allocation of assets towards real estate. They are waiting to see where that, where the price points finish in terms of cap rates for various assets. We are still, interestingly enough, where there's an opportunity, making acquisitions. Smallish, I'll admit, not like they were during the past five, six years.
But there is an appetite when it's clear that the seller has recognized the position, and we look like we can make a reasonable purchase. So there is money there. It's not going to slow us. We are being cautious, as you would expect. This is a time to absolutely be prudent and cautious, and we're doing that, but where we do see the opportunity, we've got the cash, and we've got partners who've got the cash to do that. David is-
I'll just add the question around, are we a manager of choice? Well, that's up to our investors. You know, we're not going to publicly announce whether we think we're a manager of choice. All I would say to you is that 70%-75% of our property funds under management has always been in wholesale markets. So the large super funds, we are the largest manager of pension capital investing in real estate in Australia. We've had—we've got over 100 institutional clients, from all of your super funds through to some very large pension funds in Europe and Canada who don't have to invest in Australia.
They choose to invest in Australia because they like the returns and, you know, when they partner with us, I’m assuming they’re taking a view that we are a manager of choice in those particular sectors. So, you know, going forward, yes, I expect with the breadth of the relationships that we will be able to partner with them. If you look at the evolution of Charter Hall, we have been able to pick out sub-sectors of what would have been traditionally core sectors, whether it’s triple net retail, Bunnings, social infrastructure with the Telstra exchanges, childcare. So when we sit down and talk to a super fund or a global pension fund, we actually have a demonstrable track record in a lot of sectors that gives them choice. And you, as an investor, always want choice.
I tell my team, "Tenants and investors make the decisions, not us. What we can do is provide the opportunities." So, yes, I have confidence, given the depth of the management team and the diversity of opportunities that we can present to investors that, you know, we will continue to attract capital. The reality is, as David said, there's a lot of uncertainty around where bond yields will settle and where the cost of debt is, but as I said before, been through lots of cycles. It turns, and equity will flow back into good quality real estate, just as it will flow from, you know, the financial advisor market or high net worth investors or mom and dad retail.
And I think those managers that have got a diversity of opportunities from core through to, you know, higher risk opportunities are gonna have a lot of conversations with potential investors. So that's, you know, the best way I can answer that.
Thanks. Thanks, David.
A quick one. I am a bit traumatized about one of your peers raising money in the REIT market at a significant discount to NTA in the name of growth, which has really spoke to me in terms of externally managed REITs. But just given where-
I wouldn't call them our peers anyways if they've done that, but anyway.
Yeah, but just, just looking for the reassurance from the board today that... 'cause as you said, they've got nice assets, but equity dilution has, has been one of the leading causes of underperformance for REITs over the, over the time. But just looking for the reassurance from the board that you would not raise equity for some of the REITs at the current discounts to NTA in the name of growth. I mean, if, if, if you have to do so to pay down debt, so be it, but just looking for some sort of reassurance there that asset sales would go first. Raising dilutive equity is not in your-
I think you've got to be careful to not ask us, as a CHC board, to usurp the role of separate RE boards of any funds, whether they're listed or unlisted. What I will say is that we are committed to what we've discussed at all of the REIT boards, is to go through an orderly process of divestments. We don't see raising discounted equity as the optimal outcome. I know some people have, but I don't see that as a pathway for us.
Thank you, Charlie. Yeah, just in front there.
Chairman, I'm the representative from the Australian Shareholders' Association. My name's Robert MacMahon. Our members invest in this group and also their listed and unlisted funds. So I'd like to ask a totally different type of question, and it relates to your auditor. Now, I believe that PwC has been your auditor for an extended period of time. So my question has three components to it.
Mm-hmm.
If you can give an indication as to roughly how long PwC has been the auditor of the Charter Hall Group?
Mm-hmm.
When was the last time that you went to market with a tender? Thirdly, we couldn't find in the Annual Report, although it may be there, how much you spend on auditing fees. Thank you.
Well, I might, I'm not sure, Ewan, whether there's anything you want to add once I've made some remarks, but, to my understanding is that PwC has been the auditor since the listing?
Yep, since we IPO'd in 2005.
Which is 2005. The last review we had was, I want to say, four, five, five years ago. A review stroke-- When I say review, I'm hesitating to use the term tender, because while we got indications of price, and it was our intention to go to tender at that point, through a discussions with PwC and some changes that they made, we were happy for them to continue for another term. So that's the answer for that. In terms of dollars, it'll be-- I'm sure it'll be in the Annual Report. Karen, can you- Yeah.
It will probably be there.
Sure.
On then.
Yeah, please.
Sorry. I understand that you did a review, you didn't do a tender.
Mm.
Would you consider now, in light of everything that's happened in the last year or so, actually going to tender for your auditor?
We have considered the matter, but not in quite the bluntest way that you've just described there. So we have, I guess, reviewed whether, in light of some of the reputational issues and behavioral matters associated with the tax group and PwC, considered whether we would seek an alternative auditor. Wouldn't be much point in tendering if PwC ended up being the same auditor again. So we've come to the conclusion, I mean, both we've had representation, both Karen and I, as Chair of the Audit Committee, have had representations from PwC, and they have actually made us comfortable with their approach.
We have a high regard for the individuals associated with our audit, and we were comforted by the fact that the assurance team within PwC is separated from the consulting team. Auditors are subject to external review and have a compliance obligation to meet the rules associated with that oversight. And so therefore, we were comfortable. So, Karen, is there anything you'd like to add?
No. I mean, just to go to the, the numbers, they are on page 108. It was 525,000 for services themselves, 68 for tax advice, and 160 for other services. So the other services, well below. And they're, they're, they're sensible numbers. I mean, it is something we obviously have given our—turned our mind to seriously, not just this year. We've turned our mind to it seriously every year, we've given the, the longevity and have done the reviews. We're also conscious that we're just changing CFO, and so we need to have appropriate processes and due diligence around anything we consider moving forward. But we'll continue to assess the quality of the service and benchmark that as well.
Okay. Thank you very much.
Thank you.
If you want to say anything.
Good afternoon. Steve Mabb, my name. I'm a shareholder, a member of the ASA, member of Team Invest. I've got a question about our CFO, actually. So, the CFO resignation seemed quite sudden. Doesn't look like it was a succession plan, given that they went off to a competitor. So I'd like some feedback from the board, maybe the Rem and Nom committee Chair, on how you view succession planning, particularly in the case of David. We hope he's here forever, but at some point, he probably won't be. So what's our view and our plan in terms of potential successes for David? And did we play a bit of tit for tat with GPT poaching their CFO? Because we're not in the boardroom, we don't get to see how these conversations happen.
Be interested in your views on how that's played out, understanding there's probably some legal requirements as well.
Sure, sure. Look, if I may, David, just make some remarks, and then please-
Well, you're here, so-
Yeah.
That's good.
So David chairs the Remuneration and Human Resources Committee. So look, Russell Proutt, for those who don't know, was our Chief Financial Officer, and a very good and very valued member of our team. There was an opportunity for him to become the chief executive of another organization, GPT, which he took. And look, we wish him well, but not that well. So look, it was an opportunity that came his way. He was obviously ambitious, and therefore, you know, did what he thought was best. To your question about tit for tat, to put some context, the replacement CFO is coming from GPT to us. So one of his first jobs is to find a new CFO.
Look, I wouldn't call it tit for tat, I'd call it nice symmetry. Our succession planning process, including succession planning for David Harrison, is what most companies would undertake. We go through at least once a year. It's a topic that's discussed much more often, but formally once a year, a succession process. You'll end up with each senior position, and then the next level below the senior position, where we will look at: Do we have a successor ready now? Is there someone ready in two years? Is there someone ready in five years? And included in that list is, obviously, our own people.
But where there are gaps or where there are opportunities elsewhere, we keep our eye on executives in other organizations through the property industry. It's not a big industry. People are well known. And so those that have ability are clearly on our radar, on our list, and Anastasia Clarke was one of those people. So that was the basis on which we could move with such speed. Essentially, for those that don't know, our CFO resigned on a Friday. By the next Friday, we'd signed up a new one. So-
Could I just add, when we replaced our previous CFO, when Russell was appointed, I sought after, or sought out Anastasia at the time. I wasn't good enough to convince her to put her hand up. She had, you know, some succession opportunities at the time. So for me, it was a very easy decision. And as David said, the board looks at succession candidates, internal and external, and we map the market all the time, right through to ExCo -1 , ExCo -2 . So I know it looks like tit for tat, but let me assure you, you know, Anastasia's a fantastic candidate. And, you know, I appreciate the swiftness that our board got together and considered that opportunity.
Because if we didn't act quickly, let me tell you, there was a lot of people going to be chasing her. So that's just to give you a bit more context.
Perhaps because the issue of Chief Executive succession is asked a lot by our institutional security holders, and so I think it's only fair that we say to you what we say to them, which is that we, as a board, have a very, very strong preference. And it's stronger than a preference, frankly, to when the time comes to find a new CEO, to promote from within. We feel that we have a strong bench amongst our executive committee. We feel that there are people there who are very capable of leading this business, and every CEO will do it differently to the previous one. That's a given, but we believe it's part of our role, a very, very important role, to make sure that there are succession candidates within this business.
So that's what we say to those who own, you know, 4 or 5% of the company. So I think it's only fair that we actually share that with you as well. We did have a couple of questions that came in. Sorry, one more.
Just got a quick one on cyber. So, obviously understand these companies are in other industries, but looking for a bit of comfort here that we're not going to be the next Toll or the next Optus. And interestingly, ASIC and the Home Affairs Office have come out over the last couple of months and made it clear that they're going to hold boards accountable going forward, not defer this to management. So who are the experts on our board that are asking our IT and information guys the right questions to make sure that we're mitigating every possible risk we can here?
Well, if you're asking the question, is there a cyber expert on the board? Then there isn't. Is there a lot of experience on the board? When you look, and I won't go through, but it's in the Annual Report. If you look at the boards, and the executive experience of the people that sit in front of you here, I think there is a great, great set of experience. Having said that, I do think, and it's not cyber, but I do think there are some elements that we have to... Broad technology elements that we have to look at as we look at succession planning of our board. Because we have, and I think rightly, and it's proving the case right now.
We have focused in our last few appointments on making sure that there's deep, deep property experience on this board. 'Cause, look, it's a cyclical industry, as I said in my formal address. That just means when you're having a great upcycle, there will inevitably be a downcycle. And wise heads who've been through whether it be the late eighties, early nineties, whether it be the GFC, or the Asian crisis, all those things has really, really paid off. But you're right to point out potentially the additional. Well, not potentially, it's almost inevitable that there'll be some sort of cyberattack. I mean, we get cyber not intrusions, but attempted intrusions, just like any other business does.
To date, we've been fine, but it's an area of great concern to us. Now, it's a little bit... There are many other targets that are much better than we are, which is, I know, not a great defense, and I'm not pretending it is. But at least it does give us a capacity to look in a timely way at our own systems. Okay. There were a couple of security holders who could not attend this meeting, who sent in questions. And so, if you'll just bear with me, I'll go through and read their questions, and give an answer to them. So the first one is from Dale Taylor. And really, the topic is about our distribution policy.
In regards to the board's capital management of distributions, would the board consider making a different approach in the future? I'm of the view that both the business and shareholders would benefit from a more fluid distribution policy than the current one of 6% annual growth over time. When I say fluid, I mean that during years when forecast OEPS suggests the return on equity we exceed a solid benchmark of, say, 15%, the board would retain essentially all earnings. During years when the suggested return on equity doesn't meet this benchmark, the board will then distribute, then could distribute earnings relative to how low the return is.
Does the Chairman have any thoughts on such a suggestion? So Dale, we feel that the board's policy of 6% growth, annual growth in distributions, it strikes a good balance between retaining capital to grow the business, while also sharing the group's earnings to the owners of the business. And over the years, we've found investors place a quite high value on the certainty and consistency with our distributions. So we don't look to make regular changes to that policy. We still have a significant number of security holders who are A-REIT specialists, and they really value the distributions. In fact, the...
What is suggested by the question is that there will be periods when it's more useful to retain more of the earnings, and other times when it's better to distribute them all. In fact, the way it works is almost like that. So when we have periods of high performance fees and high, as a consequence, high profit, the payout ratio is much less than in a year when we don't have performance fees, and therefore, the payout ratio is higher. So we don't go from 100% to zero, but we might go from 60% payout ratio in a year of no performance fees, to something like maybe 30-40% in a period of performance fees.
So in effect, we do it, but not to the same extent, that is suggested in the question. Final point I'd make is that, that policy, during those periods of high performance fees, and I'm thinking it was 2021, 2022 financial years, that allowed us to accumulate capital, to support the business, co-invest with funds, and that co-investment that was mentioned in the answer to an earlier question, is an important part of why institutions actually want to invest with us. They like to see our balance sheet alongside them. So that was a question from Dale Taylor. I'm just looking around the room to see if there's any other questions, because there was a second question, that came in, from a security holder.
Shiming Xu wrote to us and said, "The office market is tough, structural headwinds, real estate stocks on the ASX 200 have an exposure to office. And the more it's exposed to office, the harder it's fallen. So will Charter Hall concentrate more on industrial, social infrastructure and retail shopping centers from now on?" I mean, the answer is that we are a multi-sector manager. We're diversified across a whole range of sectors. So, you know, it's easy for us to switch from one sector to the other. And as a consequence, you know, you can, you'll see that through the results over the course of the year, as we pivot from one sector to another.
And while headlines for office continue to be negative, it's still a really important real estate investment sector. And there are still investors who are willing to invest in office, but subject to getting the price right. And as a group, we continue to explore all avenues of growth across all the sectors we operate in. But the questioner is correct. Given the headwinds that are facing office sector, it's easiest for us to raise incremental capital in other sectors right now. So you won't be surprised to see our focus being on those other mentioned sectors, like industrial, social infrastructure, retail. Are there any meetings, any questions? There'll be opportunities to ask questions as we go through the formal resolutions, and as I said, general questions at the end of the meeting, if you would like to. So I'm now gonna begin.
Darius Perschke, as individual shareholder. I just have a question to David Harrison. Just kind of, kind of broad question. I know the company from GFC, and I know how spectacular success it was, through the managing GFC and getting on the other side. And I wonder, what... How, how much tougher that crisis is compared to GFC? And is it just because we have much larger property portfolio? Thank you.
Look, I don't think this period is as challenging as the GFC. You know, we had a complete credit crisis in the GFC, and bank or credit dried up completely. You know, we're pretty comfortable with our access to debt. We've got a great relationship between, you know, Aussie banks and offshore banks, and, as the Chair said, a pretty sizable portfolio of, debt capital market issuance. I think Charter Hall took advantage of some of the opportunities that were thrown up by the GFC, and, as you alluded to, we grew strongly after that. But we grew strongly because we had access to, you know, good capital partners that could see value and were prepared to back us.
As I said to—in response to Charlie's question, I don't think that's gonna be any different this time. If anything, having a greater scale, greater diversity, greater access to multiple numbers of investors, it sort of throws up more opportunities. So yeah, I'm... You know, to the earlier question, we concentrate on every sector, and, you know, you need more concentration on the hard ones. So, you know, we will continue to look at opportunities. I'm sort of pretty excited about what's gonna get thrown up in the next couple of years, just like I was in 2009. So, you know, you gotta have one eye on defense and two eyes on offense, and generally, that'll play out okay over the medium term.
Thank you. Well, if you're all happy, I'll move to the formal business now. And as I said, you still can ask questions on each resolution if you would like. So to begin, I table the Notice of Meeting, which is dated the sixteenth of October, 2023, which contains the resolutions for consideration today. So I'll take the Notice of Meeting as read. There's copies of the Notice of Meeting and Annual Report were made available to you by post or email. They're available on the webpage, and there were copies at the registration desk. Five items of business, five resolutions for your consideration today. All resolutions to be put to the meeting today will be decided by poll.
So the first item is to approve the Annual Report, and this should now be displayed on the screen. Please note, there's no requirement for security holders to approve these reports, but I've put it there in case there are any questions specifically on the reports. And as mentioned earlier, there's representatives of PwC here to take any questions in respect of the audit of our financial statements and the general conduct of the audit. Charlie?
Yeah, just a quick one, more of a request, please. I don't think it's in the Annual Report or the accounts, but I believe you equity account the positions in CLW and all the REITs which you own, which put those values in there at NTA, as opposed to their carrying value. Now, there's clearly a very large difference in the two, which I... It would just be easier if we could understand what the actual market value of the company's NTA is going forward, rather than the equity accounted version. Apologies if it's in there. I don't think it is, but just for transparency, I think that would be appreciated, just so we can understand what the market value of the company's NTA is, as opposed to the-
Balance sheet.
The balance sheet, which is... There's a very big difference between the two. So maybe just a request for going forward, what is that figure? If you could report on that, that'd be great. Thanks.
We'll take that on board. But what I would say is there's a very rigorous process every year as we go through to assess the carrying value of those particular investments. So be assured, that's subject to considerable debate and oversight.
There's an assessment of the payments relative to those two comparatives that's done as well.
Yeah.
It's and it is on page 89. So thank you.
Okay. Thank you...
No further questions on the financial reports or the conduct of the audit? We'll now proceed to the formal resolution set out in the Notice of Meeting. Item two is the election and re-election of directors, and these resolutions are ordinary resolutions, and as you can see, are displayed on the screen. I'd like to ask each director that's up for election and re-election to say a few words to detail their background and experience for the benefit of shareholders. If we could begin with Stephen, please. Stephen, would you mind saying a few words?
Well, thanks very much, David. Ladies and gentlemen, I was very pleased to be invited to join the board in January this year. I did so on the basis that I'd had many, many years exposure to Charter Hall, and had always been very impressed with the extraordinary growth and success of the business, and indeed, the very impressive leadership team which created that success and growth. I had that exposure through 40 years of a property career that was entirely at Jones Lang LaSalle. And I did so... I did enjoy joining the board on the basis that it was in times that currently in the next few years, would be far more challenging than the last few years.
At Jones Lang LaSalle, I held various leadership roles and took on those leadership roles, often in very difficult times. I think you learn a lot from difficult economic times and difficult market times. The various leadership roles I had, I was a director of the business for 33 years. I was an international director for 22 years. I was CEO for Australia and New Zealand for 13 years, on the Australian board for 22 years, and the Asia Pacific board for 14 years. My various professional disciplines were across office leasing, valuations, capital markets, and strategic consulting. My experience also included various mergers and acquisitions.
The biggest, which I was involved in, in a small way, but participated in, was the merger with LaSalle Partners in 1999, which took Jones Lang LaSalle to being one of the biggest property firms in the world. And certainly, we grew it in Australia to be the biggest property services firm. And it was also one of the largest property fund managers in the world, with around $100 billion under management. I also found that joining the board, I learned very quickly, internally, how in-depth and across everything was the management team, and indeed, the board. It's a very impressive board.
I'm proud to be a part of it, but very impressed with the detail, and focus, not just on the current challenges which are before us as a business and as a market and indeed as an economy, but the opportunities that will come. And I hope that my experience can bring a further dimension to exploit those opportunities and indeed, indeed deal with some of the challenges. So as I say, I was very pleased to join the board and very pleased to seek your endorsement to my re-election to it.
Thanks, Stephen. Now, David, would you like to say a few words, please?
Yeah, sure. Thank you, David. I joined the board in December 2016, so I've been a director for seven years, and I'm up for re-election at this annual general meeting. I'm currently the Chair of the Remuneration and Human Resources Committee, a member of the Audit, Risk, and Compliance Committee, and also a member of the Investment Committee. I've worked with the management team for the seven years, and all I can say is they are outstanding across the board. Worked very closely with David Harrison as the CEO and the executive management team, and also quite closely with the Remuneration and Human Resources team, as a result of all of the work we do on that committee. My background is in real estate, has been...
I started in 1980 with Jones Lang LaSalle, on a cadetship, going through four different departments in, you know, leasing, valuation, investment, sales, and what was the other? Research was the fourth one. I then spent some time with Richard Ellis, worked overseas in London, and then came back to Australia and worked with Armstrong Jones for a number of years, a funds management group. I then spent 10 years with Lendlease, and part of that time as the CEO of GPT, and then the Global CEO of the real estate investments business. So my background is exactly the sort of business that Charter Hall is involved in.
And therefore, I think I bring strong skills and experience to the business, and that is, you know, just not the real estate and funds management, but obviously having reported to boards, dealt with governance issues, risk and compliance, all of the operational matters that also have to be dealt with at the board level. So in summary, I have enjoyed working with my colleagues on the Charter Hall board. I've very much enjoyed working with David Harrison and his management team, and I look forward to serving for another three years, should I be re-elected. Thank you.
Thanks, David. Any questions of either of the directors? Yes.
I guess I've got a question for you first, David. Just about, do we have an internal policy about shareholding for directors? And then specifically for David, been on the board for six years, David, you don't quite have a year's worth of fees yet in, in holdings. So have we got a policy, and have you got any personal comments in terms of your personal holding in the company?
Would you like to answer that, David?
I can answer both parts.
Yes.
Yes, we do have a policy, and we are required to hold securities to the value of 12 months of our fees. The calculation of that is based upon the higher of cost or value. I hold, I think, 17,500 securities, and based upon what I paid for them at the time, it exceeds the annual fees, and therefore, I am in compliance with that policy.
Any other questions? Yes.
Charlie. It's a question for you, David. You're on the board of, or you're the Chair of Arena REIT, which is a childcare REIT, very similar to one of the funds in which Charter Hall manages CQE. I was just looking at it then. Over the past five years, Arena REIT has delivered a share price performance of nearly 50% growth. CQE has lost circa 7%. Now, again, I know this is not a CQE meeting, but ultimately, if the manager, Charter Hall, can't deliver a good outcome for its funds, it won't be able to deliver good value for its shareholders, and it won't be able to grow.
So I, I'd just like to hear your thoughts as to why you think there has been such a stark difference in the performance of Arena versus CQE. Arena trades, you know, basically in line with its NTA. CQE is at a near 35% discount to NTA, I believe. So just appreciate your thoughts on why that internally managed structure has delivered such a better, better return compared to the, the Charter Hall performance, please.
Charlie, I think that would be a better question to ask him at an Arena meeting, which is next week, something, is it?
Well, there is an AGM next week, yes.
Yeah.
No, it is... It's directly related to one of the funds in which we manage, and if we can't deliver a good outcome compared to the peer set-
Well-
then I think-
I think the question-
That's going to reflect poorly on the manager. So given David is on the board of both Charter Hall and Arena, I think it's a fair question.
I think the question, if I can, rephrase it for you, perhaps, it should be: is there... It, it's a question about CQE and its performance. I think if we take the... You put David in a very difficult position as Chair of Arena, and as on this board. So I think the correct question is more correctly asked at a CQE meeting. But we will talk to it here in brief about CQE's performance, because I do take your point that it's a fund of ours, which we manage. But I'm going to re-redirect the question to David Harrison.
I think, there's two stark differences if you sort of read the results presentations for Arena and CQE. Up until three years ago, the fixed growth coming out of the majority of the CQE leases was stronger than CPI linkage. And obviously in the last three years, because Arena's got a much higher percentage of its portfolio leased on CPI rent reviews, they've had stronger three-year growth. And, you know, there's always gonna be compositional differences. Both portfolios are majority childcare. But if you look at the NPI line, there's a lot of similarities. There's not a vast difference in gearing. I think Arena might be sort of 4% or 5% lower gearing than CQE, so that might have some impact.
But, you know, we're working hard to, you know, get the market to sort of value what we think is a very strong social infrastructure portfolio. I gave up a long time ago, trying to guess how thousands and thousands of different investors price-listed stocks. You know, the way you value things will be different to another listed shareholder. So, they're the comparative differences. So that's all I can say.
Okay, thank you. So I'll now declare the poll open, and ask all security holders, if they haven't already done so, to cast their votes, for or against the resolutions by marking the box on the voting card alongside the resolutions. We'll now display on the screens the respective proxy votes received, in respect to this last resolution and in respect to both Stephen and David. The final results won't be known until after the conclusion of the meeting. And it's clear from the proxies received, that both Stephen and David will be elected and reelected respectively.
If I move to the next item, which is resolution three, this is an ordinary resolution of Charter Hall Limited and relates to the adoption of the remuneration report included in the Annual Report for the year to 30 June 2023. It's not a binding vote. Instead, it's characterized as advisory in nature. However, it does provide important feedback to the directors on how the security holders feel on a range of matters, including remuneration. So I'll now pause to see if anyone would like to ask any questions in respect to this matter.
I would love a layman's explanation-
... For the deferral of 100% of the cash component of the STI, David, that's listed in the Annual Report. It's a little bit confusing. I'm just trying to come at it from a retail shareholder's perspective. What was the motivation for the deferral of the cash component, and, you know, how has that played out?
Would you like to give it, or would you like...
Yeah, I don't mind.
Yeah. Okay. Why don't you give it-
Okay.
as Chairman of the Remuneration Committee?
So part of the structure we have on our remuneration is senior management can elect to voluntarily defer the cash component of their STI into securities. And they have that right to do it each year, and I think it was the FY 2022 year, David, that you elected to defer the receipt of that STI or deferred it into equity so that it's allocated on the basis of the face value of securities on a volume weighted average basis for the month of June. And then they are deferred for, you know, a set period of time.
So why would they do that? What's the motivation?
Well, yeah, I think only the individual could answer that. Yeah.
Well, you know, look, the reality is a third of STI for senior management has a mandatory deferral over two years. I think that's pretty common in... We recommended to the board, and they agreed that if individuals, and everyone's got different circumstances, some have got mortgages, some don't. If individuals wish to have even greater alignment with shareholders and choose to roll what would otherwise have been paid as cash as a voluntary deferral, they can do that.
I think why you will see some defer voluntarily some years and some not is that, you know, when and if performance rights vest, the taxman says, "You owe me virtually half of it." So unless people have got the resources to keep funding their tax bills, you're going to have senior executives cash in some vested performance rights. Some years they'll defer all their LTI. Some years, you know, we've had senior executives choose to defer half of what they're entitled to and take half. So that's the motivation. But from a board perspective, we want to do everything we can to increase the alignment of executives with shareholders. So and many of us that deferred, you know, are out of the money compared to spot prices.
But I'm not worried about spot prices, because as I just said, in the last two days, it just shows you how volatile it is. So that's the whole reason.
Okay.
Layman's version was it was to give some added flexibility to people to actually acquire and remain security holders for a longer period of time in the company. If there are no further questions, I'll display the proxies on the screen. Thank you. We'll now move to the next item, which is the issue of service rights. So this is an ordinary resolution of both Charter Hall Limited and Charter Hall Property Trust, and relates to the issue of service rights to our CEO, David Harrison. So these are part of the short-term incentive, as it says on the, in the resolution. So as you've just heard, a third of the short-term incentive is deferred each year into service rights for a period of between one and two years.
And because he's a director of Charter Hall, an issue of securities generally requires the shareholder approval. So that's why we're putting it in front of the security holders. So the text, as I said, is on the screen. Any questions in respect of this resolution? Right. As I said, the proxies are displayed. You can see them on the screen. We'll now move to the next item, which is the issue of long-term performance rights. Again, it's an ordinary resolution of Charter Hall Limited and the Charter Hall Property Trust, relating to the issue of performance rights to David Harrison.
It's part of his annual remuneration that these rights are awarded each year, and they have a four-year, what's called a vesting period, but only if performance hurdles are met. This is a scheme that involves the issue of securities to David Harrison, and security holder approval is required. The text is up on the screen. Any questions in respect of this resolution? Okay, thank you. Display the proxies. If you haven't done so already, could I just ask you to mark your voting cards? As I said earlier, the results of the poll will be collated after this meeting and put up on the website later today. Please don't forget to hand your forms to the Link representative.
Sorry, there we are, at the back of the room, who will take them as part of collation of the results. I'll now pause one last time to see if there is any general questions, that, people would like to ask, before we, before we close the meeting. Sure.
... Want to commend you on a very shareholder-friendly meeting today. I know we're webcasting it. Any chance we can do a proper hybrid meeting going forward, like we did in COVID? Because I've traveled down from Brisbane today to be here. I love the option of being here, but equally, there's a lot of smaller shareholders, I suspect, around the country that couldn't be here today. And the hybrid gives them a chance to participate fully rather than just watch a replay, obviously. So any thoughts on that going forward?
Sure. Look, we've debated it, and concluded that, from our point of view, and we believe from the majority of shareholders' point of view, it's a good option. It. We like the face-to-face interaction. Feel if we went to a fully hybrid session, that we would lose that. Also, frankly, from our point of view, it's... In a hybrid meeting, it's much easier for the meeting to be disrupted by certain individuals with a particular barrow to push. So, and that then crowds out, and to a certain extent, intimidates other security holders asking questions. So, my apologies for you having to fly from Brisbane. But, for the time being, we. I guess we've... We keep it under review, but we're content and think it works well.
Certainly. The ASX 200's heading that way, so, something to consider for the future. And then just a follow-up question on one of the resolutions. David had an 8% against vote, I noticed. Is there one or two of the big instas that have got some kind of concern that they enlightened you on? Any comments that you, you have there? You seem very capable and experienced to me, David, so I was happy to support your election. But yeah, interested in, in what happened there.
Yes. One of the proxy advisors recommended in a vote in one of their governance reports, not their principal report. One of the-- They have two reports. One's called a... I think it's called a governance report, isn't it? And essentially because we did not have a thirty percent of our board was not made up of women. So they have a policy then of voting against the longest serving male director who comes up for re-election. I think we're at 29%. So that was the reason for the recommendation against them, and we imagine that that's the reason for the 8% or 9%. Okay, everyone. Well, thank you very much for your attendance.
Thank you for your questions, and as I said at the outset, the senior management team and the board will be here. There's some refreshments somewhere? Yes, around that way. And look forward to meeting you after the meeting. So thank you. I formally close the meeting.