Macquarie Bank’s soaring profits and executives’ pay were the talk of the town
The salaries and bonuses earned at Macquarie Bank over the years are legendary - not to mention the working hours and the parties.
As the 2000s rolled on, and as the troubles of 2002 were digested, Macquarie was characterised by a steadily greater ambition. There was a feeling that anything was possible. Macquarie was shooting the lights out and its people were getting very rich along the way. Here are Macquarie’s after-tax profit numbers in sequence from 2002 to 2008: $250 million, $333 million, $494 million, $812 million, $916 million, $1.463 billion, $1.803 billion. That’s a sevenfold increase in six years, even when the starting point was itself a record.
Macquarie’s annual reports always included the compensation arrangements of top staff and the executive committee, and from about 2005 they became the first thing one turned to when they were released. That year, Allan Moss earned $18.5 million, chairman David Clarke $9.7 million, and four members of Exco topped $10 million apiece. As profits soared, the pay went with it. Total remuneration – short and long term – earned Allan Moss $33.5 million, Nicholas Moore $32.9 million and Bill Moss $30.6 million in 2007. This would be the peak for the time being, but this was the period in which Macquarie’s top earners firmly catapulted them into the tall poppies bracket.
At every press conference around a result, the questions would be the same. How can you justify earning this much money? How much is enough? It was around this time the bank’s much-loathed but widespread external nickname – the Millionaires’ Factory, or Millionaire Factory – began to seem woefully inadequate, underestimating the matter by at least one decimal place. But there were good reasons for these numbers, because they always reflected money being made by the bank.
Macquarie’s compensation structure went all the way back to David Clarke. Former managing director Mark Johnson recalls that “one of the very fundamental building blocks of where Macquarie is now” stemmed from Clarke’s model, expanding an existing option scheme in order to bring about a sense of staff ownership of Macquarie. “Staff in Macquarie work like hell and are really good because it’s their bank. They actually own such a significant chunk of it that they think about it as their bank. Everyone’s got a stake, and that stake is not short term.”
The model would be refined over time – HR head Nicole Sorbara would steward the modern iteration after the global financial crisis – but throughout, two things have been central: compensation is linked to performance (which means profit after expenses, not revenues), and the higher you get, the more you are locked in for the long term in order to receive the attendant rewards, which are skewed towards shares.
“Most of the people who were getting these bonuses had made a very material contribution,” Moss says. “It wasn’t like these guys had inherited the business from somebody who’d retired. Nicholas Moore built the infrastructure business. Andrew Downe built the commodities business. In that context, these bonuses were appropriate.” Moore was routinely paid almost as much as Moss, and occasionally more; Moss had no problem with it, in the same way that Shemara Wikramanayake is not apparently bothered that she was outgunned to the tune of $10 million by Nick O’Kane in 2022.
Clarke, who was chair through these boom-era AGMs, is no longer around to ask, but the chairs who succeeded him – Kevin McCann and Peter Warne – note that compensation paid by Macquarie to its executives rarely came up as an issue with shareholders. “Even before regulators required it, Macquarie deferred payment from the profit pool and required it to be invested in Macquarie shares,” McCann says.
Compensation at Macquarie felt outlandish because nothing in Australia compared with it, but in US and European banks figures like these were reasonably common. While Macquarie as an Australian institution had to disclose the performance of its top earners, the likes of UBS or Goldman Sachs didn’t have to say what they were paying their top brass in Australia because they weren’t Australian institutions. Consequently, Macquarie stuck out like a sore thumb. It doesn’t anymore, in an environment where digital entrepreneurs can become almost instant billionaires, which is one reason there’s much less sniping now.
Matthew Russell, in corporate communications in this time, recalls how senior executives wouldn’t like it as the annual report publication date, usually on or just ahead of the AGM, rolled around and they steeled themselves for scrutiny of what they earned. “It got to the point where Nicholas said, ‘These are like telephone numbers, and this is always going to be something that seems ridiculous from the perspective of ordinary Australians’.” The best thing they could do was shift the announcement of compensation details to coincide with the results, “which was significant, because then you tied the figure back into the performance.”
Some would be irritated that their compensation had to be disclosed at all. Peter Costello, the federal treasurer of the time, had limited sympathy. “I said, yeah, well I don’t like the disclosure laws either, because my salary gets disclosed too,” he says. “But unlike you it embarrasses me because it’s so small.” Costello accepted Moore had a point that it wasn’t fair Americans didn’t have to disclose what they paid in Australia, making Macquarie salaries look out of step with anyone else’s. “But what do you want me to do about it, Nicholas? Abolish the disclosure laws in Australia? Say that because Goldman doesn’t have to disclose the salaries, Australians don’t have to disclose theirs? It’s not the real world.” As Costello said to another bank executive, not at Macquarie, “you”ll just have to cry into your millions at night.”
Some other perspectives of executives below the top level are interesting. Andrew Downe appeared in the top earners every year for at least a decade, but says that in terms of it being disclosed, “I didn’t really have a problem with that if people thought it was relevant information, mainly because of the way compensation worked at Macquarie. It is very much a performance-based remuneration, and if your performance is not good, you will not get paid. And the deferral has always been so long it’s very hard for people to get away with burying a skeleton and hoping they’re gone before it appears.” Downe’s concern is about what the scrutiny of profit and pay represents. “I think the tall poppy thing is really sad. It’s sad because Macquarie is only tall in Australia. Once you get outside Australia, we’re not particularly tall at all.”
At the more junior levels of the organisation, young people who were drafted into Macquarie wouldn’t quite know what had hit them. Those who were getting started in this era recall that they never worked so hard – or partied so hard.
The young candidate arriving for an interview at 1 Martin Place would be struck by the feeling of a five-star hotel lobby. It was a construct of white marble and glass, of plush carpets and wealth, where a row of beautiful young women, immaculately dressed and groomed, would be sitting in dark suit and skirt ensembles behind a reception desk. Having navigated this grand arrival, the interviewee would sit distant from their interviewer across a table of absurd size – “it felt like Vladimir Putin’s meeting table,” says one – and go through the three tests of the day: the infamous psychometric test, a literacy test and a numeracy test.
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“Macquarie is only tall in Australia. Once you get outside Australia, we’re not particularly tall at all”
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Every company says their culture is work hard, play hard. “But nothing comes even remotely close to how hard they used to work and how hard they used to party at Macquarie,” says one employee from the research unit during this era. New arrivals were told bankers’ standard hours were 7am to 7pm, which undersells the typical hours of the time: 7am to 11pm was not uncommon and, during reporting season, all-nighters. One junior associate calculated that, assessed on an hourly basis, he was paid less than a McDonald’s worker. It was true.
It didn’t suit everyone. “When a new associate came in, bankers would give them three months, the typical time it would take to break or make them,” says one. “The bankers used to say if they could endure the first three months, they were in; they had what it took.” It wasn’t just the hours; Macquarie wasn’t a place where you could get by just by being at your desk all the time. Successful people were productive and efficient, with a can-do attitude, striving for more. “There were a lot of brilliantly clever people there and everyone just wanted to do better.”
One recalls a colleague who would lament, while drunk on the contents of the booze fridge in the kitchen, that he had promised himself when his son was born that he would quit in a year so he could spend time with his family. But he was still there, and his son was now 15: he had somehow trapped himself in a life with three privately educated kids and a huge house to pay off where it was impossible ever to leave. Macquarie tried to make sure that the incentives to leave the building were reduced. There were several well-stocked fridges in the kitchen and every week the one full of free booze was restocked with beers, local wines, champagnes and international selections. The fridge had seductive back-lighting, a glass door and a sign – “fridge opens at 12pm” – which was not always observed in an environment where people worked so long that an early morning could really be a late night.
The misogynistic culture of the industry and the era did not escape Macquarie. One woman who worked there recalls the hushed callout that would take place every Wednesday among the guys who wanted to have lunch together. “It was an open secret that they’d go to Men’s Gallery, the strip club across the road from work, for lunch every Wednesday.” The men had regular golf days too, which excluded women, who were left behind at work. “I don’t think any of the men, or heads of department, gave a thought to the women’s position or how unfair and discriminatory it was.”
Some of this, while not unique to Macquarie, is deeply problematic by today’s standards. There was a staff database that could be filtered by various different criteria, among them languages spoken. It became known that one male banker had amassed, with some effort, a list of all the women in his target market who worked at Macquarie, and then distributed it to his friends, who distributed it to their friends. “The staff database was often used akin to a dating database,” says one woman who worked there. “It had our names, photos, job titles, the division in which we worked, phone numbers, email addresses.” If the place could be turbocharged by day, that was nothing compared to what happened at night. Security guards who did the rounds would regale people with tales of what they’d seen, including people having sex in the shower or under their desks.
No day was more eagerly awaited than White Envelope Day, when bonuses were awarded. “Their bonuses dictated what their next year looked like – new house, new car – but more so, it was about their worth, sacrifice and egos, and if it was recognised and rewarded by the size of their bonus,” says one former junior. “Everything they’d done and sacrificed over that past year was tied to that bonus.” As if watching a sport, the juniors would see the bankers go into the head of department’s offices one by one to receive their envelope. “The whole day, people would be watching the door of that office, and more so, the bankers’ faces,” one recalls. Some came out ecstatic, others angry, some poker-faced, some red-faced. There was little modesty or embarrassment about a big sum: a good bonus was to be boasted about. “You always knew who got a million dollars plus,” says one. “They weren’t shy about sharing the news.” White Envelope Day was a write-off in terms of work, and one that nearby bars would plan for, getting extra staff in ready for the high-octane debauch that would follow.
Another big day was the AGM. Everyone finished early and got properly dressed up. It was the only time they could meet everyone else who worked at Macquarie, and at the more junior level served as a dating facility at the post-AGM parties. Parties pervaded the whole place at that time. Each division would have them with reasonable frequency, and the organisers would try to outdo one another. They were held in five-star hotels, on yachts, in Luna Park. There were gifts: a Tiffany keyring, a silver Georg Jensen bowl. “There was just so much money everywhere,” says one organiser.
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