Welcome security holders, proxy holders, and guests. The Goodman Group annual general meetings will start shortly. Today's meetings are being held in person in Sydney and online using the Computershare meeting platform. Online attendees can watch a live webcast of the meetings, and security holders and proxies can ask questions and submit votes via the platform at any time. Online questions can be asked verbally or by typing in a question. To ask a verbal question via the platform, please follow the instructions written below the broadcast. To ask a question by typing, online attendees should select the Q&A icon at the top of the screen. Type your question in the text box. Once you're finished typing, please hit the Send button. Please note that while you can submit questions from now on, the chairman will not address them until the relevant time in the meeting.
Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Security holders attending in person will also have the opportunity to ask questions at the relevant time in the meeting. Voting today will be conducted by way of a poll on all items of business. The chairman will shortly open voting for all resolutions. If you are attending online and are eligible to vote, once voting opens, press the Vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. You can change your vote up until the time the chairman declares voting closed.
An online meeting guide is available in the Investor Center on the Goodman website and includes step-by-step instructions on how to attend and participate in the meeting. The guide includes a phone number to call should you require assistance during the meeting. For security holders and proxies attending in person, if you are eligible to vote, you should have been issued with a voting card when you registered today. The items of business are on the reverse of the voting card. Further instructions will be provided following the items of business. The chairman will now open the meeting.
Good morning and welcome to the 2022 annual general meetings of Goodman Group. I'm Stephen Johns, the Independent Chairman of the group. I extend a warm welcome to those of you who are in the room here with us today here in Sydney, as well as the people who are joining us online. Before I begin, I'd like to acknowledge the traditional owners of the land on which I'm presenting today, the Gadigal people of the Eora Nation, and I pay my respects to elders, past and present. I'd also like to introduce your directors. To my left, we have Gregory Goodman, Group CEO. I'm sure most of you would know him very well. Our Company Secretary, Carl Bicego, then Rebecca McGrath, Mark Johnson, and Phillip Pryke, all Independent Directors. On my far left, Anthony Rozic, an Executive Director.
Also joining us from New York, our independent directors, Chris Green, Hilary Spann, and Vanessa Liu. In Brussels, Executive Director Danny Peeters. In Hong Kong, our independent director, David Collins. I now declare the meeting open. For those participating online, voting is also open now. I now turn to my chairman's address. Goodman delivered another very strong result in 2022, demonstrating the resilience of the group's strategy and our team's ability to adapt and continue to grow sustainably. Significant contributions were made from all areas of the business, which saw operating earnings per security, EPS, increasing by 24%, well ahead of the initial guidance to the market of 10%. Gregory Goodman will talk in greater detail about both the operational and financial performance of the group in his CEO address.
Over many years, Goodman has established strong leadership, a global portfolio of high-quality real estate in strategic locations, and the financial resources to create a sustainable business delivering strong returns. Goodman is an innovative company and has created a culture whereby decision-making and policies are focused on the long-term sustainability of the group. Conviction to our capital management strategy demonstrates how we can maintain earnings growth through difficult market cycles and put in place a long-term plan with strong capital partners. We continue to be cautious and prudent, retaining significant resources and liquidity to manage through uncertain economic environments and take advantage of future investment opportunities. Our geographic diversity also enables us to manage market fluctuations within our regions more effectively, where those regions are in different, differing stages of the economic cycle.
Reflecting the increasing importance of sustainability and the changes arising through technology and innovation, the board recently established a new sustainability and innovation committee, which I believe will make a significant contribution to delivering on our long-term strategy. While this committee will address the important areas of environmental compliance and regulation, its principal focus will be to work closely with management by identifying and assessing the risks and opportunities created by technological change that will impact our business today and well into the future. We're firmly of the belief that sustainability and innovation are strategic business issues and not merely compliance and regulatory matters. I'll now turn to remuneration. Given the long-term nature of Goodman's approach to real estate investment, last year the board reviewed the group's remuneration arrangements to provide even greater alignment between security holders and our senior leadership team.
The outcome saw the introduction of a 10-year long-term incentive plan with the existing five-year plan remaining in place for all other team members. For the first time, the plan incorporated environmental and sustainability targets in assessing operational performance. The plan was designed to support our objectives of encouraging long-term decision-making, incentivizing our people to achieve outstanding results, and retaining our high caliber people in extremely competitive industrial markets around the world. As you recall at last year's AGM, we did not gain the 75% threshold support required to avoid a first strike. Consequently, we engaged with many of our investors early this year to obtain feedback, and so to better understand their views.
While we received strong support for long-term incentive plan structure, particularly in relation to the four-year testing and ten-year vesting conditions, the primary issue raised by investors related to the quantum of performance rights which were granted last year to key management personnel, including the executive directors. This was due in part to differing approaches used in assessing the value of the grants under the new ten-year plan, where the board had adopted an economic value approach rather than the face value approach more commonly used nowadays in the market. Investors supported the EPS testing hurdles that we incorporated in the FY 2022 awards last year, but also indicated that they should continue to be ambitious. We firmly believe that our remuneration plan has been instrumental in retaining and incentivizing our global team, which has delivered consistently strong growth.
While we have met the expectations of over 70% of our investors, we received negative recommendations from two proxy firms this year, and consequently, we have not achieved the 75% threshold required to avoid a second strike. I understand the main concern expressed by the principal advisory firm, which was based largely on their view that the EPS hurdles are not sufficiently challenging. We strongly disagree with this assessment. The board has adopted ambitious EPS growth targets with a threshold compound annual growth rate of 6% and an upper level of 11% per annum required for full vesting. This upper limit requires growth of 52% over the four-year testing period of the 10-year plan. This will be a challenging target to meet under any circumstances, but particularly so in the current volatile market environment.
In addition, the board has accepted face value as the primary determinant of quantum, and the resultant FY 2023 awards to the CEO and key management personnel have been significantly reduced. Based on the face value of the maximum potential outcome, the CEO's proposed FY 2023 award has been reduced by 46% from last year, and other executive KMP awards reduced by 33%. We do, however, acknowledge today's voting outcome on the remuneration report and will continue to engage with our investors and the proxy advisors in the new year. This year, we appointed two internationally based directors, Hilary Spann and Vanessa Liu, in line with our objective to increase diversity on the board with the appropriate mix of skills, gender, and geographic representation.
Hilary, who was appointed in April, is a highly experienced global real estate executive with an extensive background in public and private equity markets. Vanessa, who was appointed in May, is an experienced technology innovator, business leader, and digital media entrepreneur. Hilary's and Vanessa's insights and experience are well-aligned to our long-term strategy and values while bringing greater diversity to the board and helping to shape Goodman as a forward-thinking company. Their CVs are set out in the notice of meeting. In September, Rebecca McGrath notified the Goodman board of her intention to bring forward her retirement from the board from the 2024 AGM to the end of February 2023 to accommodate her expanding commitments with other companies. Rebecca just sits on my left here.
Since joining the Goodman board in 2012, the group has undergone substantial growth and has changed markedly. Rebecca has played an important role, particularly through her chairmanship of the Risk and Compliance Committee. On behalf of the board and management, I thank Rebecca for her significant contribution over the last 10 years. Considering the appointment of our two new directors and the forthcoming replacement for Rebecca, the board has asked long-standing director Phillip Pryke, the chair of the Remuneration Committee, to stand again.
We also have Independent Director Chris Green, together with Executive Director Anthony Rozic, standing for re-election today, both of whom make a very significant contribution to board deliberations. During the formal business section of today's meeting, I'll ask each director standing for election and re-election to address the meeting. In conclusion, Goodman is well-placed for the future. We have high quality industrial real estate, a committed and experienced management team, a proven business model, supportive capital partners, and a strong balance sheet. On behalf of the board, I sincerely thank our people for their commitment and determination in achieving excellent results in FY 2022, and also extend my gratitude to you, our security holders, for your ongoing support of Goodman.
Before I hand over to Group CEO, Gregory Goodman, we will show you a short video to highlight Goodman's global strategy. Thank you very much.
Good morning and welcome. Goodman has had an extraordinary year. We executed on our long-term plan. We delivered AUD 1.5 billion of operating profit, which equates to around 25% growth for the year. All the business areas contributed very strongly with investment earnings up 20%, management up 28%, and development earnings strong at 34% increase. It was an outstanding result, and I'd like to thank our team around the world for delivering for our customers, partners, and security holders. The world is now more volatile. We're facing higher interest rates, geopolitical risks, and slowing economies. However, we're still seeing customers wanting greater productivity and efficiency out of their real estate in great locations and importantly, close to the consumers.
We're in a very privileged position to be able to continue to deliver for them. Our balance sheet is strong, and we have a very low leverage. We continue to be sensible and also very patient with our capital. Over the year, we raised AUD 1.8 billion in third-party equity. We completed AUD 8.5 billion of refinancing across the group and our partnerships. At the moment, we have around AUD 20 billion of funds available for investment moving forward. We're working closely with our customers to increase productivity and efficiency, which includes having sustainable buildings which are their critical infrastructure. Our properties help our customers leverage technology that enables them to be more efficient in what they do.
When we look at sites to buy, we take a long-term approach as there can be five to 10 years to get the site into production. This is only getting more difficult. It is more challenging planning regimes around the world. Since our sites are typically brownfield opportunities, infill locations, it means we're often remediating and regenerating them as well. These sites are complex, hard to execute, but importantly, deliver the best results for our customers, investors, and the environment over time. Our occupancy around the world is 99%, which means we hardly have anything available for lease globally other than what's being built in our development pipeline. In most of our locations, the recent strength and demand has increased the market rent for our buildings, which means they should have strong income growth going into future years.
We've also increased the size and scale of our development workbook, which is now AUD 13.8 billion. While construction costs rose throughout the year, we managed them well, and we're at a point where they seem to have moderated somewhat. Our margins are strong, and we have positive leasing results. Our assets under management are now AUD 78 billion, driven by our development program and valuation growth. Our assets under management should grow organically over time and support the deep value we aim to provide our customers and investors. This year, we delivered average total return across our partnerships of more than 20%. Goodman is delivering on our ESG commitments and partnering with our customers so they can achieve their own corporate sustainability goals. We're taking action by building greener buildings with lower carbon products.
We're providing the infrastructure for the electrification of our customers' delivery fleets with more solar panels, EV charging stations, and we are piloting big battery installations while facilitating the use of more renewable energy, while we're regenerating infill sites, which can help reduce transport-related carbon emissions and importantly, costs. The Goodman Foundation continues to be very active in partnering with community groups, and we're proud to have contributed AUD 10.6 billion, AUD 10.6 million, for the year. That would be a massive amount of money if we contributed AUD 10.6 billion. AUD 10.6 million+, AUD 1 million from the staff, which is important. We're looking forward to another strong year in FY 2023. We have a significant workbook underway, continued underlying structural demand from our customers, and we have a strong capital position across the group and partnerships.
As a result, we expect FY 2023 operating EPS growth to be 11%, which equates to around AUD 1.7 billion in operating profit. We understand the market environment is more challenging moving forward, so we continue to be cautious in approach to risk management. We also understand that the world where our customers are still working to drive efficiency and productivity out of their facilities. We're realistic, but we're also optimistic about the opportunities that will come our way. Our stable cash flows from the property, low leverage, and significant liquidity in this world of rising interest rates will mean we have the capital, we have the people to undertake the larger, more complex projects, which will take more time, but are financially more rewarding. Finally, I'd like to thank the board, our investors, and our stakeholders for your contribution during the year. Thank you, and I'll hand back to Stephen.
A reminder that security holder questions will be addressed during the formal business section of today's meetings. Online attendees can ask a written question at any time by selecting the Q&A icon. Type your question into the text box. Once you have finished typing, please hit the Send button. Please ask your questions concisely. If they are particularly lengthy, they may be summarized in the interests of time. Questions may be moderated to avoid repetition. If you are attending online and would like to ask a question verbally, please follow the instructions written below the broadcast. Security holders attending in person are also invited to ask questions. If you would like to do so, please approach the microphone stands on the meeting room floor after the chairman asks for questions in respect of the relevant resolution.
For those attending online who have not yet voted, you can vote by pressing the Vote icon, and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There's no need to hit a Submit or Enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. You have the ability to change your vote up until the time voting is closed. For security holders attending in person, you will be asked to cast your vote by placing your voting card in one of the ballot boxes available at the end of the meeting after all the resolutions have been considered.
Thank you, Greg, for your address, and we'll now commence the formal proceedings of the meeting. The first item of business is consideration of the annual report and the accounts of Goodman Limited, Goodman Industrial Trust, and Goodman Logistics (HK) Limited . I now table a copy of the annual report. Eileen Hoggett from the auditors KPMG is also available to answer any relevant questions in respect of the audit, and Eileen sits here in the front row. I'll now respond to any questions submitted in relation to the annual report and the group's business. I intend to answer the questions received online first, and I will then answer any questions from those here in the room. I'm assisted by one of our executives, Alison Brink, in moderating and asking the questions that have been submitted. Alison, are there any questions on this item?
Yes, Mr. Chairman. We have a question from Stephen Mayne. Why not disclose the proxies to the ASX with the formal addresses like others now do?
Well, thank you, Stephen, if you're online. We will be doing that very shortly. We'll be disclosing the proxies before the formal part of the business. I'll be doing that in just one moment. Any other questions, Alison?
No. The remainder we've addressed online with him.
Any questions here from the floor?
No. This is about the annual report. Well, if there are no questions on the annual report, we'll continue the meeting. Now turn to the formal resolution set out in the notice of meeting. My fellow directors and I support resolutions one to 11. Please note that where open proxies are held by me as Chairman, I intend to vote them in favor of each of resolutions one to 11. Now here is the answer to Mr. Mayne. For transparency and the benefit of the meeting, I'll now present the results of the proxy votes on resolutions one to 12. I think they're up on the screen now. All of the resolutions are proposed today as ordinary resolutions and will be approved if passed by more than 50% of the votes cast.
However, even if approved, the remuneration report will receive a strike if more than 25% of the votes are cast against it. As can be seen from the screen, with the proxy votes received, which account for 82% of our share register, all the resolutions will be passed on the casting of the proxy votes, but there will be a second strike on the remuneration report. We will therefore be required to put resolution 12 to the meeting, and as you can see from the screen, the proxy position is strongly against that resolution. As indicated in the notice of meeting, I intend to vote undirected proxies against resolution 12. As mentioned at the commencement of the meeting, for security holders participating online, polling has opened and will close at the end of the meeting.
For those who are with us in the room, we'll vote on resolutions one to 12 after they have been put to the meeting. In accordance with the Corporations Act and determinations made under the constitutions of the company, each of today's resolutions will be decided by a poll. Resolution number 1. The first resolution for members to consider and if thought fit, is to pass an ordinary resolution of Goodman Logistics (HK) Limited to appoint KPMG as auditors of Goodman Logistics (HK) Limited to hold office until the next AGM and that directors be authorized to fix the auditor's remuneration. As explained in the notice of meeting, as a result of the technical holding or structure of the holding of Hong Kong Securities on the ASX, security holders cannot vote personally at the meeting in respect of this resolution.
Rather, CHESS Depositary Nominees will vote those interests in accordance with the proxy forms that they've received prior to 10:00 A.M. on the 15th of November. I now move that resolution one be approved. Alison, are there any questions?
Mr. Chairman, there are no questions.
Any questions from the floor on this resolution? If not, we can move on. Thank you very much. Resolution two, and this is the second resolution for members to consider and if thought fit, is to pass an ordinary resolution of Goodman Limited that Chris Green, a director retiring by rotation in accordance with the Constitution and Listing Rules, be re-elected as a director. Now I'd like to invite Chris to say a few words in support of his re-election.
Thank you, Chairman, and good morning, ladies and gentlemen. My name is Chris Green, and I am seeking your support for re-election to the Goodman board, having been a director since April 2019. Goodman Group is a great company that has become a true global leader in logistics and warehouse real estate, taking advantage of the broader shift in retailing that is being driven by the technology advancements underpinning e-commerce. The group is poised to continue to expand its business in key markets around the world in partnership with large and sophisticated pension and sovereign wealth funds. While the outlook for Goodman remains very positive, we are clearly entering a period of heightened volatility and risk that will require the company to prudently navigate these more uncertain times. If I may share a little of my background and experience.
I spent 16 years with Macquarie Group through to mid-2018, where I was the Global Head of Real Estate. During this time, I led the firm's investment in and growth of real estate operating companies, which included a number of logistics businesses throughout Asia Pacific, United Kingdom, and the United States. In mid-2019, I established a new business, GreenPoint Partners, which is an alternatives investment firm at the intersection of real assets, technology, and sustainability. I'm the CEO of GreenPoint, and in this role have a deep insight into emerging technology trends involving real estate business models and a range of sustainability technologies. I've lived in New York for the past eight years. During my three years as a director, I've sought to bring my skills and expertise to the group and its management team.
I've been a member of the Audit Committee, Nominations Committee, and Remuneration Committee. I'm very excited to also chair the recently established Sustainability and Innovation Committee. In my opinion, we're still in the early stages of technology-driven changes to the way we live, work, and consume. I also believe that we need to urgently address the implications of climate change and move to a more sustainable business practices. I anticipate that under the strategy led by Greg Goodman and the team, the group is well-positioned to play a significant role in this future in a sustainable and responsible way. I believe that my background and expertise across institutional capital, technology, real estate investing, and sustainability, particularly as they relate to North America, bring additional perspective to the board table that I hope are valuable to the continued success of the group.
Goodman Group is my only public company non-executive director role, and I'm also director of a New York-based not-for-profit, The Opportunity Network. As noted in the annual report, two investments have been made by Goodman Group working with my firm, GreenPoint. The highest standards of governance are maintained at the Goodman board. I have abstained from the two decisions by Goodman involving GreenPoint related investments and note that the Goodman investments represent a very small proportion of the overall GreenPoint business. I recognize the trust that security holders place in directors to carry out their duties to the highest standards, and I'm committed to act so on your behalf. I hope with your endorsement today, I can continue to provide advice and good stewardship to the board and senior leadership of Goodman as it navigates its future. Thank you.
Thank you very much, Chris. I'll now address any questions in relation to resolution two. Alison, are there any questions online?
Yes, Mr. Chairman. We've got a question from Mr. Lewis Gomez. Could the chairman explain the investment commitments of $15 million and $30 million to companies associated with Mr. Chris Green? What are the benefits to GMG security holders, and how is this conflict to Mr. Green managed? Refer page 143 of the annual report.
Thank you very much. Mr. Gomez, I think he's from the Australian Shareholders' Association and acknowledge that and his interest in this question. Firstly, I just want to reiterate that Chris Green is an outstanding director. He's made a major contribution to the Goodman Group deliberations over the last three years when he's been on the board, and we're very fortunate to have him. There are two investments involving Mr. Green's interests, and he has actually alluded to those in his address to the meeting. The first one is a $15 million investment. I think we've only invested $5 million so far, but $15 million total investment in his fund management business, which is raising and aims to raise well above $1 billion.
It's an immaterial investment for Goodman Group, and I believe it's also not material for Mr. Green either. What it does do, it gives us enormous benefits in terms of insights into technology, innovations in the global real estate markets. Now, to some extent, we get the benefit of that from Mr. Green by sitting around the board table. I acknowledge that. We basically have a front row seat in what's happening in the biggest market in the world, and I think we get enormous benefits from those insights, which will really determine a lot of our strategy going forward. We see sustainability and innovation and technology as being fundamentally important to the future of industrial real estate and therefore of the Goodman Group.
For an immaterial investment on the Goodman side, I think we have already received, but we will receive in the future enormous benefits going forward. In terms of sustainability, we have got a commitment to zero emissions, carbon emissions and the like. We have established KPIs in our long-term incentive plan in that regard. Everything that we're talking about, including the establishment of the new committee, is based on sustainability and innovation being a critical part of the strategy of Goodman going forward. The second investment we've made is an investment in a farm, an agricultural farm in northern New South Wales and southern Queensland to harvest high quality farming credits.
Mr. Green brought that investment to Goodman, but the important aspect there is that we are in joint venture with the Australian Government, the Clean Energy Finance Corporation, and that is the fundamentally important part of that particular transaction. It's not material to Goodman nor to the Green operation of Chris Green and his family's operation. Clean Energy Finance Corporation and Goodman are effectively in joint venture in this arrangement in order to obtain high quality carbon credits. Without the Clean Energy Finance Corporation, we, Goodman, would not have been interested in that particular opportunity. Those are the two elements there. We think they're of great significance to the Goodman strategies and business operations going forward in terms of materiality.
They're immaterial in a financial sense to the Goodman Group and to Chris Green and his interests. Welcome the question. It's a very good question and one that Chris himself addressed in his speech a few moments ago. Are there any other questions online, Alison? No.
There are no further questions online.
From the floor? Thank you very much. We now move to resolution three. This resolution for members to consider and if thought fit, is to pass an ordinary resolution of Goodman Limited for Phillip Pryke, a director retiring by rotation in accordance with the constitution and the listing rules, that he be reelected as a director. I'll now invite Phillip Pryke to say a few words in support of his reelection.
Thank you, Stephen. Good morning, ladies and gentlemen. My name is Phillip Pryke. I've been an independent director of Goodman Group since 2010, and have chaired the Remuneration Committee and been a member of the Audit Committee. More recently, I've also joined the Risk and Compliance and Sustainability and Innovation Committees. During my time, I've seen Goodman strengthen and consolidate its position as a leader in the market. I supported the processes and decisions that have seen a refinement of its strategy to focus the global property portfolio on infill locations in major urban centers and the expansion of the group's network to 14 countries. As chairman of the Remuneration Committee, we have sought to achieve strong alignment between the remuneration of our people with our security holders.
In that, I emphasize the point that it is all our people who participate in our equity program. We consider this to be a major contributor to the quality of people we attract and retain in a highly competitive global market and the consistently high performance of the group over many years. As Stephen has explained during his address, our remuneration plan has been enhanced to provide for a contemporary solution that is both relevant to the business and addresses feedback raised by our investors. Goodman's people are key to its success. Development of an effective performance management process, formal succession planning, training and professional development programs, and an emphasis on career development have all contributed to the consistently high performance of the business in recent years.
It is a privilege to work with a board and management team that takes issues related to culture and corporate behavior seriously and recognizes and actively promotes the group's values as being critical to the success of the business. I continue to participate in the Audit Committee under the leadership of Mark Johnson, allowing me to maintain a very thorough understanding of the accounting and financing matters faced by the group. More recently, I have complemented this with participation in the Risk and Compliance Committee. In addition to my responsibilities for Goodman, I am currently a director of Carbine AgInvest Limited in New Zealand, and I bring a wide breadth of experience to the role, including public, private, and non-government sectors at both the local and international level. My experience also spans across the energy, financial services, fishing, health, and technology industries.
The recent establishment of the Sustainability and Innovation Committee of the board illustrates the importance of sustainability and the changes arising from technology and innovation. My participation in this committee allows me to bring many years' experience in the electricity and green energy field to assist the group in assessing the opportunities and risks for Goodman in enhancing its ESG program and developing service offerings for its customers. This will be the last time I put myself forward for election to the Goodman board, as I intend to step down during the coming term. Participating in the consistent improvement in performance of the business over the last 12 years has been an absolute highlight of my career. It is a testament to the leadership of Gregory Goodman and his team that this consistency has been maintained through various economic cycles.
I seek your support to continue to contribute over my next term and to assist in transitioning to the next generation of the board. Thank you very, very much.
Phil, thank you. Alison, are there any questions in relation to resolution three?
Yes, Mr. Chairman. There's a question from Stephen Mayne. "Phillip Pryke is the long-term remuneration committee chair. Why is he running after a second strike? Does he regret not properly accounting for stock-based bonuses to his staff at which is at the heart of the second strike? The proxies were not visible on screen. What are the proxies on this resolution, and has Gregory Goodman voted his stake in favor?
Well, quite a few questions in one there. Let me just say this. Firstly, we did have it on the screen, the votes for Phil's reelection, and I think there's about a 70% vote in favor. I think 71%.
71%.
71%. Philip has been an excellent contributor to the board over many years. I've been on the board now for five or six years and I can attest to that during my time. Philip has been very effective. He's been very determined and very conscientious in all that he has done. Philip is a very good member of the Remuneration Committee and as Chair he has led the way. Remuneration is not just a committee activity, it becomes a full board decision. The elements of our remuneration plan, which we're very proud of because we have an excellent alignment between security holders and our executive team over many years.
I think I addressed those, most of those issues that Stephen has asked about in my chairman's address, and that we have a very effective remuneration plan. This year, we actually made major reductions in the awards to the senior executives, the key management personnel. As I said in my chairman's address, the face value of the award to Gregory Goodman was reduced by 46% this year. The face value for the key management personnel was reduced by 33% this year. The principal reason why one of the major proxy firms, I believe, the reason why they were recommending against it was they believe that the earnings per share hurdles that were in the plan for the next four years were too easy to achieve.
As I said in my chairman's address, we strongly disagree with that. We have an upper limit of 11%, which if achieved over the four years would give us a 52% increase in earnings per share, which is a massive increase. We're starting this year from a much higher base, given the fact that we had an outstanding FY 2022, where we had a 24% earnings per share growth. We're in a situation where we've got a very volatile environment and difficult environment around the world going forward. When we made this decision in August, the position was difficult enough. What's, you know, all that's happened in the three months since then has just added to the uncertainties and the volatility in the various markets that we operate in.
From our perspective, we believe that the hurdles we have or the targets we have for earnings per share growth are very ambitious, have got major stretch elements in there. In our view and my strong personal view, the feedback we had from the market last year, and I know this is a remuneration question when we haven't actually dealt with the rem report yet, but when we look at the markets that we're in, and the feedback we had from the market last year after last year's AGM, that we have actually met those very head on and have dealt with it very effectively. Phil has been a driving force for that as chair of the Rem committee. I emphasize that remuneration is indeed a board decision. Are there any other questions online, Alison?
No more questions for this resolution.
From the floor, I guess I've just countermanded my own instructions about keeping questions for the particular resolutions, because I've dealt extensively with the remuneration, but this is really for the reelection of Philip, in itself. As regards to Philip's reelection, are there any questions? If not, we'll move on. Thank you very much. Resolution four relates to Anthony Rozic. The fourth resolution to consider, and if thought fit, is to pass as an ordinary resolution of Goodman Limited, that Anthony Rozic, a director retiring by rotation in accordance with the constitution and our listing rules, be reelected as a director. I now invite Anthony to say a few words in support of his reelection.
Thank you, Stephen. Good morning, ladies and gentlemen. I've had the privilege of being an executive director of Goodman Group since 2013, and today I'm seeking reelection for a further three-year term. I joined Goodman in 2004 and have previously held the roles of group chief financial officer and group chief operating officer. In my current position of deputy group CEO and CEO for Goodman in North America, I've been closely involved in the establishment and subsequent responsibility for the management of Goodman's U.S. operation. Over the ten-year period, we have organically grown our North American business to over $9.1 billion in assets under management, inclusive of a development workbook with the value on completion of $2.6 billion to support future growth targets.
U.S. is now the group's second biggest investment after Australia, and as a director, I share both direct insight and accountability with the board. Goodman has brought a fresh, dynamic, and innovative approach to the U.S. real estate market, enhancing the brand value into the largest economy and logistics market in the world. Together with our capital partner, global customers, and key stakeholders, operating in the largest economy in the world presents a significant long-term growth opportunity for the group. I have almost 30 years of financial, capital management, and operational experience in the property industry, together with a working knowledge of global markets. It has been a privilege to be part of a group and have direct involvement in the establishment and growth of its global business.
If reelected as a director of Goodman Group, I believe that the broad range of roles and responsibilities that I've held provide me with significant relevant experience to continue to offer valuable insights to the board. I'm aware of the challenges ahead, but also excited about the opportunities the future can bring Goodman. Thank you.
Thank you, Anthony. Alison, are there any questions in relation to this resolution?
Yes, Mr. Chairman, I've got a question from Stephen Mayne. In 2019, Treasury Wine Estates voluntarily moved to annual elections for directors in line with best practice that occurs in both the U.S. and the U.K. Dual-listed companies like News Corp and Rio Tinto all do this in the laws in the U.S. and U.K., and BHP has pledged to continue doing this even after its U.K. DLC ended last year. Can the chair and Anthony Rozic comment on whether our increasingly global company will follow this TWE lead and move to annual elections of directors at the 2023 AGM?
Well, I'll answer that question on Anthony. The answer is no to that. We think we have an appropriate setup here. We comply with the normal practices here in Australia. I think we're very effective. The board is operating very effectively and we have no intention to have annual elections by 2023. Any more questions from online before we go to the floor?
No further questions online.
One question here. Thank you.
I'm a shareholder of Goodman. My name is Janet Norton. This is not really a question, it's a comment on the reelection of Anthony. Having been a member of the board for so long, I think that's extremely valuable, and I wouldn't dream of not voting for someone who's seen Goodman through such a long period of growth and ups and downs. The other idea of electing board members, reelecting them every year, I think is tremendously disruptive, and as a shareholder, I wouldn't vote for that.
Thank you very much. Thank you. Are there any other questions or comments? Thank you, then we'll move on to the next resolution. The fifth resolution for members to consider, and if thought fit, is to pass as an ordinary resolution of Goodman Limited, that Hilary Spann, a director appointed since the last AGM and retiring in accordance with the constitution and the listing rules, be elected as a director. I now invite Hilary, who's in New York, to say a few words in support of her election. Hilary, over to you.
Thank you, Chairman, and good morning, ladies and gentlemen. My name is Hilary Spann, and it is a great pleasure to speak with you this morning to say a few words in support of my election. I have an extensive background in public and private equity markets, and I am currently the Executive Vice President and head of the New York region at BXP, which is the largest publicly listed developer and owner of premium workplaces in the United States. Prior to BXP, I spent five and a half years at CPP Investments, one of the world's largest institutional investors, running real estate investments for the Americas. I sat on the Global Investment Committee and the Global Capital Allocation Committee for all public and private real estate investments, and during that time, I managed the CPP Goodman joint ventures in the United States and in Brazil.
From 2001, I spent 15 years at JP Morgan Asset Management in the Global Alternatives. This culminated in a role as Managing Director, running real estate acquisitions in the private equity space for the Northeastern U.S. for all of JP Morgan Asset Management's funds and strategies. Based in New York, I'm able to benefit from a market that is often at the forefront of trends in real estate investment from the perspective of capital and sustainability as it relates to commercial property. I believe that my extensive experience in the global capital markets and real estate private equity allows me to make a valuable contribution to the Goodman board. We're now in the middle of an unprecedented set of global economic conditions. The Goodman executive team has positioned the company well to continue its strong performance on behalf of its stakeholders.
Prudent business stewardship is a hallmark of the company under the leadership of CEO Greg Goodman. If you choose to elect me today, Goodman Group would be my only public company directorship, and it would be an honor to be considered for this role. I can assure you that I would apply my experience and energy to work diligently to add value to the business and to serve in your interests as security holders. Thank you.
Hilary, thank you very much. Alison, are there any questions online?
Yes, Mr. Chairman. There's a question again from Stephen Mayne. There's three parts to this question. First part is, could Hilary Spann and the chair comment on the recruitment process that led to her appointment to the board? Specifically, was a headhunter involved? Did a full board interview Hilary and did they interview any other candidates? The last part to the question is, did Hilary know any of our directors before engaging with the recruitment process?
Well, thank you, Stephen, for the questions. I'll try and Alison, tell me if I miss any of it, but the first one is no, we did not use a recruitment firm. Goodman sometimes uses a recruitment firm for a new director appointments, but not always. We go by people that we know or that are recommended to us and that we get to know. Yes, Hilary was interviewed by the full board before being appointed. There's no question about that. That is standard practice and will always be standard practice. The third part of that question, Alison, was?
Did we interview any other candidates?
Well, did we interview any other candidates? We were interviewing Vanessa Liu, who is about to talk to us in a moment. In terms of the qualifications that Hilary has and that were known to us, and from the interviews we had, she is an outstanding candidate. It was a great opportunity for us to be able to invite Hilary to join the board. We're delighted we did so. This was not a competitive situation where we're out in the market looking for a variety of candidates. When Hilary came to us and came to our attention that she might be available, we acted quickly and opportunistically, and I'm glad that we're able to acquire her services to come onto the board.
I said in my Chairman's address what a great contributor she can be and will be to Board deliberations. Yes, we're very delighted, Hilary, to have you with us and certainly strongly recommend her to shareholders and security holders to vote.
The final part to the question: Did Hilary know any of our directors before engaging with the recruitment process?
Well, I think Hilary actually answered that question because at the Canada Pension Plan, CPPIB, which is in charge of the Americas' real estate investments, she dealt with the Goodman Group in both the investments in the United States and in Brazil. The answer to that is yes. No more questions online?
No, Mr. Chairman.
Any questions on the floor here or from the floor here? If not, thank you. We'll move on to resolution six. This resolution for members to consider, and if thought fit, is to pass as an ordinary resolution of Goodman Limited, is that Vanessa Liu, a director appointed since the last AGM and retiring in accordance with the constitution and the listing rules, be elected as a director. I'd also now invite Vanessa to say a few words in support of her election. Thank you.
Thank you, Chairman, and good morning, everyone. My name is Vanessa Liu, and I appreciate the opportunity to present myself for election to the Goodman board, having been appointed in June. With more than 24 years of experience working in technology and startup companies and advising clients in the media and high-tech sectors, I have a deep understanding of emerging consumer and enterprise technology trends, in particular, the uptake of artificial intelligence, robotics, supply chain optimization, and how this affects consumption. I am the founder and CEO of Sugarwork, a SaaS technology platform helping enterprise companies retain their experienced workforce with flexible arrangements and knowledge transfer. In addition, I serve as an independent director for Appen, which provides training data to companies for their AI models.
Prior to joining the Goodman board, I was most recently the vice president of SAP.iO, the early-stage venture arm of SAP, the global market leader in enterprise application software, which invests in and accelerates startups in enterprise technology. In that role, I oversaw SAP.iO's North American foundries in New York and San Francisco and accelerated a portfolio of 87 enterprise startups. As a part of this role, I worked closely with customers in industries including retail, automotive, healthcare, manufacturing, and professional services to bring them new innovative technology solutions. Before SAP, I was the chief operating officer at Trigger Media Group, a digital media incubator. Prior to this, I was an associate partner at McKinsey & Company's media and entertainment practice and was based in Amsterdam, London, and New York.
I served clients in a variety of media and high-tech sectors, including online advertising, magazine and newspaper publishing, video content production, and information services, particularly on issues of digital media strategy, emerging market strategy, growth, and innovation. If I'm elected today, I look forward to working with my fellow board directors and with Greg and his team to contribute to the sustainable growth of the group. My role on the newly created Sustainability and Innovation Committee will allow me to further apply my skill set to help assess technology-related business risks and create new opportunities for Goodman. I believe my global experience, combined with that in the tech and innovation sector, will contribute to Goodman's forward-thinking strategy and positioning as providers of essential infrastructure to the digital economy.
If elected to the board, I will give you my commitment and dedication to serving your interests as security holders to support the continued success of the group. Thank you.
Vanessa, thank you very much. If we now move to questions. Alison, once again, are there any questions online?
Yes, Mr. Chairman, I have another question from Stephen Mayne. Could Vanessa comment as to whether she knew any of our directors before engaging with the recruitment process, and how did she find the recruitment process?
Now, I'll answer those questions, Mr. Chairman. Vanessa, to my knowledge, didn't know any of us at all. We did use a recruitment firm for this particular search. Given the fact that we are looking for someone in the U.S. market in areas that were unknown to the company, Vanessa's experience is absolutely outstanding for the Goodman Group. We are looking for somebody with technology expertise certainly in the IT sector, and she brings that and brings a different focus to us and to the board from what we had. It fills a very important gap in what we believe to be the skills that we need to go forward. In terms of technology and the importance of technology and sustainability, she brings enormous benefits to us.
As an area where we did not know candidates, so we used a recruitment firm. Vanessa came to us in that regard, and after an extensive process, and we're absolutely delighted that we're able to attract her onto the board. Are there any more questions online?
No, Mr. Chairman.
On the floor or from the floor? Thank you very much. We now move to resolution seven, and this is in relation to the adoption of the remuneration report. The seventh resolution for the meeting to consider, and if thought fit, to pass as an ordinary resolution of Goodman Limited, is to adopt the remuneration report for 2022. As mentioned earlier, based on the proxies received, there will be a second strike as at least 25% of the votes to be cast will be against the resolution. The vote on this resolution is taken very seriously. As I indicated in my chairman's address earlier in the meeting, the board gave a great deal of consideration to last year's voting and our remuneration policies for this year.
As I also said in my chairman's address, we strongly believe them to be in the best interest of the company. A voting exclusion applies to this resolution, as set out in the notice of meetings. The directors and other key management personnel will not be voting their securities. I now move to resolution seven, and that the remuneration report for the year end of 30 June 2022 be adopted. Alison, are there any questions in relation to resolution seven?
Yes, Mr. Chairman, we have a question from Mr. Stephen Mayne. Under the current incentive scheme for staff, on average, they can be issued almost 1% of the company each. With a market cap of AUD 33.6 billion, these are becoming increasingly big numbers. During the good times, total compensation for our staff can comprise as much as 60% of total pay. Therefore, why does our reporting of operating EPS continue to exclude the cost of share-based payments to staff? And will you commit to changing the accounting treatment?
Firstly, I'll just answer the second part. No, we're not going to change the accounting treatment. Operating profit, which is the basis for the way we run the company, is a cash-based profit. It effectively represents a true cash profit. Sometimes we have timing differences, depending on when some of the fees are earned or whether it's accruals or other things happen. But in putting the timing differences aside, cash-based operating profit is clearly, from our perspective, the appropriate element to take into consideration. The second point is that our own people are incentivized around the world to derive and achieve targets based on cash profits, not revaluations or other non-cash elements which are beyond their control.
As a prime determinant of how the business is run and how business is assessed, operating profit is the appropriate measure from the board's perspective. The third element I'd say is that, while I'm not an expert necessarily on how the share market works, my understanding, I think the board's understanding, generally speaking, is that the shares are valued, our securities are valued based on a multiple of operating profit. Also, based on the expected cash earnings over a lengthy period of time. The price-earnings multiple which we've used or the discounted cash flows which we use are based on our cash operating profits. Accordingly, we think that is by far the most appropriate measure in the way we incentivize our people, the way our shares are valued.
It definitely in every environment but particularly nowadays, in our view, cash is the appropriate element of profitability. I think any other questions online? Do we have-
No more questions online, Mr. Chairman.
I think we have a question from the floor.
Yes. It's Janet Norton again. Your earnings per share hurdle in the remuneration report, I guess it's STI and LTI. Anyway, the hurdle is a 6% increase in earnings per share for the year. To me, as a shareholder, when we're living in a time when we're told that inflation will be 6% for the year, we only have an earnings per share increase of 6% as the minimum hurdle. Really, the minimum hurdle is flat, in fact. You're not getting anywhere by only having it 6% when inflation is that high. Am I wrong there? Can you tell me where my thinking might be wrong?
Thank you very much. No, I appreciate the question. I think it's important to understand the market we're in. 6% is the threshold, the minimum. It's quite correct in the long-term incentive plan. The upper limit is 11%, which is obviously far more aggressive and has got a large stretch element in my view. If you look at where the world is today and where the market is looking at our competitors or the other people in our sector, it's not in for one year. I should just emphasize, we're talking about four years for the senior executives plan. It has to be achieved over a long period, 6% per annum, not just 6% in any one year.
That, if you look at where the market perceptions are and where the forecasts are for the REIT sector, basically expecting 0% profit growth over the four-year period. Even with respect to the Goodman Group, not that I necessarily place all the reliance on where the analyst forecasts are, but over the four-year period, even the analysts' average expectations are for an 8% increase. Our 11% is well above that. I think it's six percent is not you know a slam dunk. It's not a given. We have to work very hard to achieve that. It's not just inflation. I think where the volatility in the market is to be able to achieve any growth today, it will be a great achievement. Six percent as a threshold is a good achievement.
11% as the upper limit will be an excellent achievement. Truly excellent achievement with a great amount of stretch included. We think, as a board, and personally, I support this 100%, that we have included ambitious targets. Ones which have stretch elements in it. If our management can achieve this over the next four-year period, given the high starting point, we had a 24% earnings per share growth last year. We're not starting from a low base, we're starting from a very high base, and we've got volatility and difficulties. The fact there's inflation there doesn't mean that our earnings are necessarily gonna go up in accordance with it. There are many other organizations which has, it's obvious that, will actually go backwards.
I think we should also acknowledge the long-term strategy of the Goodman Group even before I joined the board, but certainly since I've been on the board for the last five or six years, that we have a very low balance sheet. We haven't leveraged up our balance sheet to try and improve earnings per share artificially. We've kept a very low leverage. Which means now that we're well-placed for the future because we've got a strong balance sheet going forward. We can take advantage of opportunities. We have to get those opportunities, then we have to actually work on them and make them work.
I think that, when you look at the development program we have, we have over AUD 13 billion of work in progress that Greg and his management team have to bring those to fruition, build them effectively in an inflation environment, lease them effectively, and then of course, we have to finance them effectively with our partners. There's an enormous amount of work to be done. All the signs are very optimistic, and really going forward, as Greg said in his address to the meeting, you know, there are lots of risks, a lot of issues we've got to deal with, but we actually are very optimistic going forward. The optimism shouldn't mean that we just have a very easy run to achieve easy targets.
The targets that we have imposed, I think, are very ambitious and do have a lot of stretch elements in them. Are there any other questions on the remuneration report? If not, thank you very much, and we'll move on to the next resolution. I now move to the consideration of three resolutions, eight , nine, and 10, which each relate to the grant of performance rights to our three executive directors. A voting exclusion applies to these resolutions, and in summary, the executive directors cannot vote their securities on any of these resolutions. Before proceeding to the following resolutions, I note that I propose to combine the discussion on all three of them, resolutions eight, nine, and 10, until after the three resolutions have been formally put to the meeting. I'll now formally put the three resolutions and then have questions.
Resolution eight is for the meeting to consider, and if thought fit, to pass as an ordinary resolution of each of Goodman Limited, Goodman Industrial Trust, and Goodman Logistics (HK) Limited, to approve for all purposes the grant of 1 million performance rights to, and the acquisition of Goodman Securities by Gregory Goodman, as described in the explanatory memorandum. I now move that resolution eight be approved. Moving on to resolution nine. This is for the meeting to consider, and if thought fit, to pass as an ordinary resolution of each of Goodman Limited, Goodman Industrial Trust, and Goodman Logistics (HK) Limited, to approve for all purposes the grant of 500,000 performance rights to Danny Peeters, as described in the explanatory memorandum. I now move that resolution nine be approved. Resolution ten.
The tenth resolution for the meeting to consider, and if thought fit, is to pass as an ordinary resolution of each of Goodman Limited, Goodman Industrial Trust, Goodman Logistics Hong Kong Limited, to approve for all purposes the grant of 550,000 performance rights to Anthony Rozic, as described in the explanatory memorandum. I now move that resolution 10 be approved. I'll now address any questions in relation to resolutions 8, 9, and 10, involving the grant of performance rights to Gregory Goodman, Danny Peeters, and Anthony Rozic. Are there any questions? Alison. Any questions online?
Yes, Mr. Chairman. We have a question from Mr. Stephen Mayne on resolution eight, rights to Gregory Goodman. Could the CEO summarize his past LTI grants as to whether they have vested or lapsed? Has he ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company? It's complicated, so please provide a summary. He's done a great job and has fabulous skin in the game, but it would be good to know the whole full back story.
Well, I'm not sure the relevance of the questions to the full story, and I don't think we're in a position here to start summarizing Gregory Goodman's purchase and sale of shares, and I don't think it's appropriate either. We have a situation here where we have 1 million shares being recommended to the meeting for approval. Last year, it was a much larger number. As I said previously, we had a 46% reduction in the face value of the shares being or the securities being suggested and performance rights being suggested for Gregory Goodman. Greg has, over the years, handled his own family affairs, and those are his affairs. Alison, are there any other questions online?
Yes, Mr. Chairman. Another question from Mr. Stephen Mayne on resolution nine, Danny Peeters. The CEO and co-founder of Platinum Asset Management, Andrew Clifford, told shareholders at yesterday's AGM that where a company does not include the cost of share-based payments in operating profit, you should run for the hills. Could CEO Gregory Goodman please comment on how important share-based payments like this proposed to Danny Peeters are for staff retention?
Once again, as chair of the meeting, I'll handle that question. Thank you. Stephen, and I know you're not here at the meeting and you're online. Welcome your participation in meetings. You're always very active, and I can see that you have many, many questions for us, and I do appreciate that and appreciate your interest. Firstly, let me say that we have a long-term incentive plan for all the employees of the Goodman Group. We have about 1,000 employees around the world. We call them team members, and they're very active in the success of the group. We have a five-year plan which relates to the great majority of our team members. For the top 22 executives last year and again this year, we have introduced a 10-year plan.
There is a great alignment for our executives with the success of the group. For us, we're in a very competitive international environment. We are arguably the world leader in industrial real estate. There are some companies which are larger than us, or maybe one company which is larger than us, but we are very, very successful. We operate in 14 countries. We have a great international workforce, and we have, Greg has achieved over many years, a buy-in to the strategy of the group and the interests of the group and the long-term incentive plan, whether it's to Danny Peeters, Anthony Rozic, Gregory Goodman, and to the other 998 members of our team. They play a signi
The performance rights and the involvement long-term incentive plan play a huge role in the success of the company. I think that this is a hallmark. I think Phillip Pryke, in his speech to the meeting in terms of his re-election, may have mentioned the fact that the involvement of all of our staff members, all of our team members, is exceptionally important for the success of the company. That applies as much to Gregory Goodman as it does to somebody in Japan or somebody in London. Certainly it applies to Danny Peeters, who is in Brussels.
Danny looks after is involved with the European operations and is in charge of the Brazilian operations of the group, plays a significant role in the management of the company, but also an important role on the board. Danny's involvement, like all the other executives, is very much incentivized by the involvement long-term incentive plan. I have to say, as a general comment, not just for Danny, that the need to retain good talent, incentivize our talent, and also attract new people to come and join us is a hallmark of our long-term incentive plan. Alison, are there any questions online on
No further questions online for this resolution.
Thank you, Stephen, for the question. Any questions from the floor or observations? If not, we'll move on to resolution 11. The 11th resolution for the meeting to consider, and if thought fit, pass as an ordinary resolution of each of Goodman Limited, Goodman Industrial Trust, and Goodman Logistics (HK) Limited, is to approve for all purposes of the ASX Listing Rules and the constitutions, so that the maximum annual fees able to be paid to all the non-executive directors taken together be increased by AUD 1.5 million from AUD 2.5 million to AUD 4 million per annum, effective from the conclusion of these meetings. I'll immediately say it's not our expectation that fees currently being paid will be substantially changed in the foreseeable future.
However, it does provide flexibility for future appointments or for further appointments and for us to use committees effectively. As when we last sought an increase in the permitted fee pool, this was back in 2006, we would not expect to return to security holders for a further increase for a considerable period of time. A voting exclusion applies to this resolution, as set out in the notice of meetings. The directors will not be voting any of their securities. I now move that resolution 11 be approved in relation to this item. Alison, are there any queries or questions?
No, Mr. Chairman, there are no questions.
No questions online. Any questions from the floor? There being no further questions, I will move on. Resolution 12 is the spill resolution. As mentioned earlier in the meeting, as the proxy votes indicate that there will be a second strike on the remuneration report, we will put resolution 12 to this meeting. The board has recommended against resolution 12 as we believe that it is not in the best interest of security holders for a new meeting to be convened to consider the re-election of directors. As we saw earlier in the polls from the proxy results, more than 98% of the votes are against resolution 12, and therefore it is most likely that it will not be approved. A voting exclusion applies to this resolution, as set out in the notice of meetings. The directors and other key management personnel will not be voting their securities.
I'll now address any questions in relation to resolution 12. Alison, anything online?
No, Mr. Chairman, there are no questions.
Any questions from the floor? Thank you. If there's no further questions, I'll move on. Now having put all the resolutions to the meeting, now is the opportunity for those attending in person to vote on them. For those of you in the room with us today, please vote using the voting card you were given when you registered this morning. If you're participating online and you have not already done so, you can vote by pressing the voting icon on your screen. The vote on all resolutions will be conducted by way of a poll. I'll just pause for a few moments while people cast their votes.
Mr. Chairman, we've just had one general question, comment come in.
Yes
... from Mr. Stephen Mayne. It just says, "Thank you for offering shareholders a hybrid AGM this year. Will you commit to keep doing this in future years to maximize shareholder participation? Big companies like Argo Investments," and it goes on to name many, "all banned online questions and voting in 2022. Well done for showing them up. What was the experience like from your end?
Stephen, the experience is always a pleasure dealing with your questions. We'd like to see you here in person, so we should probably ban the online meeting so that you can come here. I know it's very expensive for you to come up from Melbourne, but you could get points no doubt somewhere. General questions. Certainly. Yes, we do. Yes. Yes, please. I'll just reply to Stephen. I won't be facetious, Stephen, but we do. I do appreciate your involvement, and your questions are always very far-sighted. Sometimes a little devious, but we always enjoy them. Thank you. We have one. Can we get a microphone here? Thank you.
Well, you won't believe I come from Stephen Mayne country.
Good day, everybody. My name's Howard Paskow, a shareholder. I come from Stephen Mayne country, which is the City of Manningham in Melbourne, in the eastern suburbs. Like two humorous stories that if I may. First of all, Melbourne's entrenching itself as the financial capital of Australia. The Commonwealth Bank, our biggest bank, had their annual general meeting at the Melbourne Cricket Ground, the Holy Grail of Victoria, last month. Guess where the Bank of New South Wales is now? The Westpac. Guess where their AGM's going to be held next month? In Melbourne. Your two banks with head office here are moving to Melbourne. That's the first thing. The other one is Geoff Wilson of Wilson Asset Management.
I asked the question to Geoff Wilson at an investment seminar for his security holders in Melbourne, what would happen if he got run over by a bus. Now, I said the same thing to our CEO of the Goodman Group at an AGM about three years ago. Geoff Wilson said, "Howard, I've got about 79 members of the team that are capable of taking over as CEO of the Wilson Asset Management." Greg Goodman, this is just humorous. Have you got quite a number of people that could take over your job if you got run over by a bus?
Yeah, good question. We've got a very, very big, deep team around the world, and you've got some of them on the board here today, as well as many around the room. They all reside around the world. Yeah, there'd be a crop of about 20.
Wonderful.
You'd have not maybe 79, but you'd have a crop of 20, I think. The board looks at on a very regular basis.
My final question is, it's about the breeze. Now, outside in Elizabeth Street, I noticed coming to this AGM, it's a slight breeze. Now, if you live in bushfire areas, and the weather forecast in the middle of summer is hot, strong northerly wind. It's bushfire danger. If you live right near the sea, where the creek comes out, don't assume the wind's gonna come from the north. There's this local turbulence from the sea, and the sea breeze is coming in off onto the land, and it's swirling around. Now, I live next door to a light aircraft pilot. Young George is telling me that at Moorabbin Airport, there's an impact of the buildings that we're constructing, that Goodman Group manages at the Moorabbin Airport. It's a major light aircraft airport in Melbourne.
George made a comment, "All us pilots have warned. The local air turbulence around the airport because of the buildings, we've got to adjust. So when the plane comes in, we've got to expect unusual turbulence beside what the weather forecast is." My question to the board, are you relating to pilots with all your buildings around the world?
Maybe Greg wants to respond to that. I think we've got so much turbulence in the markets here that we're relating to that.
Right.
We don't need to have pilots tell us about it. No doubt Greg will have something to say about Moorabbin. You got a-
Yeah. Look, good question. Just in regard to Moorabbin, we're governed obviously by the federal government. We've got to comply with all the regulations in regard to building distances and runways and what have you. We comply, and we're just actually in another major master plan with the airport at the moment. The aviation part of it is an important part of it. We support and actually are spending capital with the aviation operators down there at the moment. Yeah, we're very aware of it and we comply with the regulations.
If you're landing in Moorabbin Airport, take note that the wind could be different to what the weather forecast or what the bureau suggests. Thank you, Mr. Chairman. Congratulations to you and your board for a wonderful job.
Okay. Thank you very much. Much appreciated. We've just finished the formal part of the meeting. I'm going to ask all security holders who are attending here in person to cast their votes for or against each resolution by marking.
Excuse me, Mr. Chairman. Janet Norton just wanted-
Oh, sorry.
Sorry.
I've got a few more questions.
Oh, have you?
Yeah.
Yes. I'm sorry. I was so excited to finish the meeting, so.
I know. It's been quite long. No, I've been a shareholder since way before the GFC, so you know, this company is very important to me. I'm also now a member of Teaminvest, which is an educational group, investment group. I've admired Goodman's sort of steady progress and its achievement, and it's almost impeccable record since the GFC of growing earnings per share and profit, and it's also extremely well thought of by employees. I've never heard a bad thing. I've only ever heard good reports from employees. My first question is for Mr. Goodman. You've achieved so much since the GFC. Well, you survived it, so that was an achievement in itself.
Hey, it's been better than I thought.
Yes. How do you keep up your drive to make this company keep going forward at the pace it's gone in since the GFC? What sort of personal goals do you have for the company?
Greg, I don't think I can answer that for you.
Yeah, personal goal, that's hard. Look, I think I'm one of those people that likes to be busy. I really, really enjoy industrial real estate. It's a hobby. It's not a job, to be quite honest. I'm very grateful that I'll get paid today, but effectively, I'd do it for zero, and I've told the chairman that. I just enjoy getting out of bed in the morning, and I like building something, I think, with a very special group of people around the world that work for Goodman and work with me, and they work with me, not for me. I think it's a very, very important difference. Yeah, it's a hobby. It's a life passion.
Some of the buildings we're developing at the moment in South Sydney, just you know a few kilometers from here, you know, we bought 30 years ago, 35 years ago, when I started at around better not give my age away, but around when I was around 25. Yeah, very enthusiastic like the role, and I'll do it as long as you'll support me in doing so at the company. Now, the second question was?
Personal goals.
Well, for the company, it's just, you know, what you want personally to see this company, where to go, where it's to go.
Yeah. Mm-hmm.
You know, is it going to get a lot larger? Is it going to stay that size? Do you want it to expand into more countries?
Yeah. Look, I don't know about more countries, but we're at the moment, I think we've got an opportunity to take it to another level. Absolutely. I think the world's getting tougher. We're in a very different position to a lot of our competitors globally. We don't have a lot of leverage. We've got very, very strong culture of building well-performing buildings. We're in an era as well where you've got the sustainability elements.
Mm-hmm.
You've got to be building a new product, which all our customers want. I think we can take the company to another level, and it'd be great to be sitting here in five years' time and say, "Well, you know, we are the leader globally. We may not be the biggest, but we wanna be very, very good at what we do," and I think we have the opportunity to do that. That also gets me out of bed in the morning and coming to work.
Thank you. A couple more, I'm leading on from that.
Can I just make a-
Yeah.
Can I just make a comment before you go on? That Stephen Mayne in his many questions quoted a number of companies for this, that, and everything else, and there are many companies on the stock exchange. There are very, very few companies that have a founder, fully committed, a founder who is a world leader of in the business, in that particular business, and a founder who's a CEO for 20, 30 years, who's not going anywhere. The majority of those companies that Stephen mentioned and that if you go through the list, have got CEOs who are committed for four or five years, maybe less, maybe a little bit more. That's typically what you'll find. We have a very different situation here, and I would say, as chairman, very, very grateful for that, and we're very privileged.
I appreciate that. I mean.
No, I'm supporting what you're saying.
Stilll here is exceptional, and I think we're fortunate. A couple of other questions. Gearing, you've got 8.5%, I think.
Yes
FY 22. That's your gearing. How do you protect yourself from the gearing that your partners have? Have you got a wall around their involvement so that they can't call on their investment from you because they need the money for something else? You know. How do you protect yourself from having that increased?
Firstly, you're quite right. The Goodman Group's gearing is was 8.5%. It's been less than 10% now.
Mm-hmm
for a number of years. We have a very strong balance sheet, and that we intend to keep it that way. The partnerships that we have that own most of the properties around the world typically have gearing of somewhere, what, between 18%-20%.
Mm-hmm
... which is still very low by standards. The partners we have are the biggest and best pension funds and institutional investors around the world who are not over-leveraged in their own right probably have no leverage. You heard from Hilary Spann before that she was on the Americas Real Estate Committee or the Global Committee for the Canada Pension Plan, but in charge of the Americas Real Estate, and they're one of our major investors. Those entities do not have financial constraints or over-leveraging positions. Anyhow, no, they can't take their money out of, you know, of our partnerships. It needs, you know, majority votes.
We've got 25% shareholdings on average in all of our partnerships, so we are very strongly positioned to direct voting and have control over voting. Therefore, our partnerships are not substantially leveraged and will stay that way. Goodman Group is, you could say, underleveraged and will stay that way.
It's watertight?
We believe so.
Okay, that's fine.
Yeah.
I just wanted to ask that question. It's quite important.
Yeah.
If there's a meltdown or something.
Yeah
you know, anything that's leveraged goes down more quickly. Okay. Another one, you talk about investing in a group that is looking at carbon credits, carbon sequestration or something like that.
Yeah.
Does that mean that you really think that your global footprint won't be perfect, that you need to buy in carbon credits in order to make yourself zero or whatever people?
Yeah
Require you to be? You know, generally when you buy into that, you know, it means that you can't do it yourself, so you're asking somebody else to lend them some of yours.
I'll maybe let Greg comment on this as well, but before he does, our objective is to be carbon zero.
Mm-hmm.
To that extent, we are going to take many actions to reduce the carbon footprint that we produce in our own business. To the extent that we can't do that, we will be buying in credits. We have bought in credits last year, but we are also very concerned that we should be buying in high quality credits that have got credibility in the marketplace and that we are confident are real. In that regard, that we are taking steps. One of the steps we took was this joint venture-
Yeah
with Mr. Green to
The thing is, if you buy them in, it means they're not yours. You know, they, I mean, you've bought them in, but
Yeah
It's you haven't run your business with net zero. You've had to use somebody else's help.
I think the question about net zero in the market is that people will be buying their credits because they are typically creating some emissions. Depends how much. We do create emissions. We are reducing. A lot of the activities that Greg and his team are undertaking in terms of feasibility studies, our feasibility studies take into account the amount of emissions that we will be creating. We want to minimize that. We want to get down to, if we can, close to zero. To the extent we can't do that, we'll be buying in credits or creating our own credits, which is what this particular investment is designed to do. Greg, is there anything more that
No, look, I think that's right. I think our big ambition though is actually to create better buildings with better products. You're not actually using accreditation or credits along the way. I think the farming venture gives us an opportunity to get access directly with the Australian government to some very high-quality credits, which will help offset for a period of time the difference between the better products we're using and what we need to make carbon neutral buildings. That's primarily going into our development effort where we use a lot of concrete and steel. We are working with product providers around the world and suppliers of products to actually build better buildings in regard to carbon emissions. Effectively they are costing more, but we're embracing that.
Importantly, our customers are embracing that. Our big customers around the world want to have carbon neutral buildings. They wanna move into them. They wanna make sure they've got all the elements to the buildings which give them regenerative energy. They wanna make sure they're good corporate citizens, and so does Goodman.
Yeah.
It's a moment in time, but over time we need to have better products manufactured in a more sympathetic way to the environment.
Thank you. One last question. The dividend that you pay shareholders has been fairly constant for a fairly long while, despite your share price going up amazingly and now it's come down again. You said that really you can invest the money better than us. You know, if you like, as you're growing, you can use all the money that you make and you get more profitable and so on. Is there any plans for altering that AUD 0.30 I think it is? Whatever it is that
AUD 0.30 per security. Correct.
Yes.
We're about at close to 40% payout ratio at the moment. We've. I think this is a very important point, and I'm glad you raised it. We are not a traditional REIT in the sense that we are a growth company, a very, very solid growth enterprise. We have got major ambitions to continue growing, as you can see.
Mm-hmm
from the previous discussion or can hear from the previous discussions. We have AUD 13 billion worth of work in progress. Out of that work in progress, we every year are creating AUD 7 billion or thereabouts of new asset, long-term assets for ownership, assets under management. We typically have about 25% investment in all of the partnerships around the world. 25% of what we're creating, we have to finance. We want to keep our debt levels below 10%.
Mm-hmm
our leverage below 10%. We are reinvesting substantially into the growth of the business.
Mm-hmm.
The retained earnings is one of the ways, one of the main ways in which we do that. If you have 60% retained earnings and AUD 1.5 billion worth of operating profit, which is a cash profit.
Mm-hmm
Let me emphasize that again. It's about what, AUD 900 million worth of capital that we have to reinvest in the business. We do various other things in terms of buying and selling as well. It's our intention to keep on growing the business. We're a growth company, so we have to do that. It's our intention to retain our major or 25% ownership of the various portfolios, and it's also our intention to keep our debt below 10%. From that perspective, dividend payout ratio will remain, you know, pretty much where it is at the moment.
Shareholders are left with, dividend doesn't give you very much. You really got to get a higher share price and then perhaps sell some or something.
Yes.
I mean, that's.
Our shareholders, hopefully will understand that their economic benefits and their financial benefits will come from the growth of the enterprise as they've seen.
No, I understand.
... over the last many years.
Yes. I understand.
Yeah
Just saying..
No, that's a very important point, and I think it's really significant that that's understood and that the investors we have, you know, appreciate the fact that a part of their return will come from the dividends, but a greater part will come from the growth of the company.
Thanks for your answers.
Thank you. Are there any other questions? I know I was racing towards the voting part of it, but if there are any other questions, or observations, happy to take them now. I guess everyone's had a chance to vote by now. When you've completed the voting cards, if you could place the cards in the ballot boxes which will be circulating around here from representatives of Computershare. Have they gone around yet or are they about to?
Yes, they have, Sir.
They have gone around.
Yes.
Okay. Thank you very much. Thank you for your patience, and I'm pleased to confirm officially that resolutions one to 11 were passed, while resolution 12, which was the spill resolution, was not approved. We will announce the full details of the voting results to the ASX after this meeting. I now formally declare the voting closed. If there's no other business to be considered, and I don't think there is at this point, I'll also declare this annual general meeting closed. Thank you very much for your attendance. For those of you who are here with us in the room, please do join us for refreshments in the foyer. Thank you very much for your involvement. Thank you.