Macquarie chief executive Shemara Wikramanayake's succession plan is a matter of timing
Investment bank Macquarie Group likes to use its annual meetings as a forum to reshuffle the executive ranks.
Former chief executive Nicholas Moore got the ball rolling in 2018 when he announced his retirement at the AGM and named his successor, his well-regarded asset management boss Shemara Wikramanayake. She took over five months later.
The modern Macquarie likes to hang on to its chief executives. Moore was in the post for 10 years, during which he steered the investment bank through the shock of the global financial crisis within months of his appointment.
Before Moore, Allan Moss was CEO for 15 years, and took the investment bank to its 1996 stock market listing. It debuted that year with a market capitalisation of $1.3bn. Today, Macquarie is closer to $90bn with operations in nearly every part of the world.
Wikramanayake is just about to notch up seven years as chief executive, and the Macquarie she is running today is a much different machine from when she started.
She faced the Covid-19 disruption a little over a year after she started and has steered the bank deeper into private markets and commodity infrastructure.
She also moved Macquarie into its flashy new headquarters that dominate a city block in downtown Sydney.
Some big investors believe Wikramanayake has got another year or so to run if she chooses. There’s also low-level talk from other investors that even with the current US headwinds, Macquarie’s relative stability makes it a good moment to outline an inevitable CEO succession. That’s why the upcoming July 24 annual meeting in Sydney has garnered attention beyond the first-quarter update.
To be clear, there is no investor push for change at Macquarie; but there is a growing appetite for how the bank is starting to position itself over the longer term.
Wikramanayake this year made the call to exit the bank’s US beachhead – the public markets operation that manages more than $280bn on behalf of pension funds, insurers and small investors. That was a key point in the rise of private markets over public-facing investments likes stocks and bonds.
The investment bank too is being more selective on green energy bets.
The rush of capital into renewable generation means the market is flooded with solar and wind, while a shifting political mood means the days of outsized returns are over. The returns now are in green energy storage and firming. At the same time, Macquarie is doubling down on digital infrastructure such as data centres and booming private credit markets.
As Wikramanayake heads into her eighth year, her chairman, Glenn Stevens, would have succession planning well under way. Stevens is a stickler for governance, and the former Reserve Bank governor was last year reappointed for another three-year term, possibly making it his last. Appointed in 2017, he is already the longest-serving member of the Macquarie board and has been chair since 2022.
While boards look after oversight, a chairman really has one job and that is to pick a new chief executive. The timing is just as important, and the trick is to aim for a smooth transition so there’s not too much disruption between changing a chief executive and a chairman also retiring.
It would be extremely unusual for Macquarie to hire a new chief from the outside, although Stevens will want to benchmark what talent is on the market.
Any executive reshuffles at the upcoming annual meeting will be a strong indication of who will run Macquarie deep into the 2030s.
The investment bank has been giving some clues into the candidates.
Leading the race is Ben Way, Macquarie’s Hong Kong and New York-based head of Macquarie Asset Management. This is the bank’s most strategically important unit and critical for delivering annuity style returns.
Way has been running Macquarie Capital since 2021 and refining the push into energy and digital infrastructure. Way was recently doing the rounds with investors whereby he was talking up the future of his business unit around the four “Ds”: Digitisation, decarbonisation, demographics and deglobalisation.
The head of Macquarie’s investment banking unit and banking veteran Michael Silverton is also in the race. Silverton did his management apprenticeship under legendary former Macquarie Capital boss Tim Bishop, and was one of Wikramanayake’s first major executive appointments in 2019.
Remember, former long-serving boss Nicholas Moore moved to the top job from leading Macquarie Capital. It would be a shift in strategy and signal of a move deeper into private credit. In March, both Silverton and Way separately led daylong presentations at Macquarie’s recent European investor tour. This was seen as a key test for both executives.
A longer shot, Simon Wright – the newly appointed head of Macquarie Commodities and Markets – would represent a major generational shift. The commodities business is the biggest single earnings driver, last year adding $2.8bn in pre-tax profit. The banking boss Stuart Green will be keen to put his name to the mix, but it would represent another strategic shift.
Elsewhere, Alex Harvey has been Wikramanayake’s chief financial officer from the start, helping her to reshape the bank.
Macquarie has built its business model around evolution, and now Stevens will be looking to play his part in pushing this along.
Why Domino’s was disrupted
The burger billionaire Jack Cowin had two aims from his surprise market briefing for Domino’s Pizza. The first was to show the fast food player wasn’t in disarray following this week’s shock resignation of chief executive Mark van Dyck.
The second was to show Cowin was firmly in control and knew what had to be done to make the pizza maker great again. It was short-term comfort but something badly needed following the dramatic 25 per cent plunge on the back of van Dyck’s resignation on Wednesday.
Big shareholder Cowin has stepped in as executive chair, and insisted it was van Dyck’s decision to step down, citing the role and the travel wasn’t what was expected.
However, Cowin did reveal there were tensions over a difference of opinion between himself and his hand-picked CEO on a major part of Domino’s revival strategy. Where van Dyck was pursing a plan of same store sales growth, Cowin wanted to see Domino’s move more aggressively on cost-cutting. A search is now underway for a new chief executive. Van Dyck, who notably wasn’t at Cowin’s briefing even though still with the pizza maker, was appointed only seven months ago.
Domino’s has been sideswiped from the disruption in fast food markets. According to Cowin, it is market structure rather than changing tastes that is hurting Domino’s – even as numbers from rival KFC show consumers are flocking to chicken rather than pizza in the box.
The pizza maker got a “free kick” from the Covid pandemic given its strength in proprietary home delivery leading into the lockdowns, Cowin says. Where it had an edge (giving it a peak market value of more than $14bn), it has since badly fallen behind given the rise of Uber Eats, DoorDash and the like. Today it is valued at a little over $1bn, overshadowed by Mexican upstart Guzman Y Gomez ($2.8bn).
As more signed on to the third-party platforms, suddenly Domino’s was competing against every suburban takeaway food shop, and fast food rivals from McDonald’s to KFC and even Cowin’s own Hungry Jacks.
This was the biggest change for Domino’s business, Cowin says. And it’s this loss of market share that has had more impact over the rapid rise of healthier rivals like Guzman. He points out that Domino’s same store sales have stayed flat in Australia, while everyone else has risen, and the pizza maker has failed to seriously confront this.
He says the delivery market is not going to go back to what it was.
“We just have to continue to find a better way to be more competitive and more cost-effective way than what we may have done in the past.”
Significantly, Cowin questioned the need for Domino’s traditionally large technology spend if this no longer gave it the advantage it once commanded. This suggests where Domino’s previously spent a lot on doing all the tech itself, it should be leaning more on outside tech vendors, possibly opening it up to third-party delivery.
“If we don’t have a competitive advantage, let’s stop trying to recreate the wheel,” he says.
Cowin gave some confidence that the issues at Domino’s have been cauterised, but the hard part comes in returning Domino’s to its former glory. Cowin believes that its scale will be Domino’s edge in the future: “We are the biggest, strongest pizza company in this marketplace.”
Now it just has to learn how to use it.
johnstone@theaustralian.com.au
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