Megaport Limited (MP1) Earnings Call Transcript & Summary

Welcome to this Extraordinary General Meeting of Megaport Limited. My name is Bevan Slattery, Chair of the company. I'd like to begin by acknowledging and paying my respects to the Turrbal people, who are the traditional custodians of the land, which Megaport's head office stands and where we present from today. I'd also like to pay my respects to the elders past and present and to extend that respect to other Aboriginal Torres Strait Islanders who are joining the EGM. On behalf of the Board and staff, Megaport, a welcome to the EGM. As we have a quorum, I declare the meeting open. I'd like to introduce the Megaport Board of Directors; Vincent English is our Executive Director and Chief Executive Officer; and Nonexecutive Directors; Naomi Seddon; Jay Adelson; Mike Klayko; Melinda Snowden; and Glo Gordon. Due to COVID travel restrictions all directors are joining online today. Also joining us online are Sean Cassidy, our Chief Financial Officer; and Celia Pheasant, our Company's Secretary. We have not received any apologies from shareholders unable to attend this meeting and have not received any questions prior. As you know, in response to COVID-19 conditions, today's meeting is being held online via the Lumi platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies will have the ability to ask questions and submit votes. Online attendees can submit questions at any time. To ask a question, select the Messaging tab at the top of the Lumi platform. At the top of that tab, there is a section for you to type your question. Once you finish typing, please hit the arrow symbol and send. Please note that while you submit the question from now on, I 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 the same topic, amalgamated together. For those shareholders who wish to ask a verbal question, an audio questions facility is available during the meeting. To use this service, please pause the broadcast on the Lumi platform and then click on the link under Asking Audio Questions. A new page will open where you'll be prompted to enter your name and the topic of your question before being connected. You will listen to the meeting on this page while waiting to ask your question. If you get any issues using the system, please return to the Lumi platform. Voting today will be conducted by way of poll on all items in business. In order to provide you with enough time to vote, I will shortly open the voting for all resolutions. At that time, if you're eligible to vote at the meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you 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 do, however, have the ability to change your vote up until the time I declare the meeting closed. The proxy votes already received are contained in our presentation today and will be displayed on screen at the appropriate time. All undirected proxies will be voted by me in favor of the resolution to the extent that I'm permitted to do so. I'll now declare the voting open on all items of business. The voting tab will soon appear. Please submit your votes at any time. I will give you a warning before I move to close the voting. I will now give my address. On behalf of the Board, the resolutions to grant options to each of Michael Klayko, Ms. Melinda Snowden and Ms. Glo Gordon, which were put to shareholders at Megaport's Annual General Meeting on 22nd October of 2021, and voted down, will be put to shareholders again at this meeting. We are proposing the resolutions for your consideration once again because we strongly believe that it is important to be able to attract and retain the type of top talent at a board level that is critical to move the organization into our next stage of growth globally. We all share a common goal of wanting to see solid growth and performance across the organization and to achieve the financial targets we are hoping to, requires a strong team at every level. Having Board members that are security holders ensures that we have an active interest in the achievements of the organization and ultimately increasing the value of the company over time. We want to be able to hire experienced directors with relevant industry experience within the markets in which we operate. That requires us to be flexible for the right skills and experience so that we can remain competitive and align with the relevant market expectations. On a global basis, this means competing with opportunities that directors have in much larger and more technology-centric markets, such as the U.S. Our concern as a Board is that rigid governance rules apply restrictions on our ability to do this effectively and which ultimately hinders our ability to achieve our goals and objectives. Support for the election of Mr. Klayko, Ms. Snowden and Ms. Gordon was resounding. Greater than 99% of shareholders voted "for" their re-appointment. Shareholders understand the contribution of these directors to the business and what we are trying to achieve for our shareholders. However, disappointingly proxy voters recommended shareholders vote against their pay, specifically, against granting them 100,000 options as part of their remuneration package. Does voting down the grant of options to Mr. Klayko, Ms. Snowden and Ms. Gordon mitigate any risk that they fail to exercise their duty to express dissenting views on the Board because they are concerned that their options may not vest, no. Mr. Klayko, Ms. Snowden and Ms. Gordon are industry professionals with track records of success and valuable reputations. Is the amount unreasonable? No. The options are issued at market, each grant represents only 0.06% of share capital and the grants allow the company to retain highly regarded and experienced global talent on a cash-efficient basis. What voting down the resolution does do though is create a failure on our part to fairly compensate these top professionals and adequately recognize their unique experience, time, expertise and significant contribution. We also fear the implications will carry on and have far greater impact than just this present situation as it has the potential to impact Megaport's ability to attract and retain directors in the future. For the reasons outlined above, the Board, excluding Mr. Klayko, Ms. Snowden and Ms. Gordon, believes the options form part of the offer that accurately reflects their value and the terms on which they joined our Board and accordingly recommends that shareholders vote in favor of the resolutions. Now we've come to the formal business of the meeting. As set out in the Notice of Meeting, there are 3 resolutions to be considered today. The resolutions have been outlined and explained in the explanatory memorandum that was included with the Notice of Meeting. Each resolution will be put to the meeting. I'll advise a number of proxy votes received on each resolution before the next item of business. As each of the resolution deals of the subject matter that is the grant of options to nonexecutive directors, I will hold all the questions until the last resolution and answer all questions together. Each resolution set out in the Notice of Meeting is to be considered an ordinary resolution and as such, must be approved by a simple majority of the cast vote by shareholders entitled to vote and voting on the resolution. Once the voting is closed, our share registry provider will tabulate the results. Those results will be displayed on our company website once available. Resolution 1 in regards to grant of options to Nonexecutive Director, Mike Klayko, for resolution, I ask you to consider if in favor, to pass the following resolution as an ordinary resolution. That for the purpose of ASX Listing Rule 10.14 with all other purposes, shareholders approve the grant of 100,000 options with an exercise price equal to the closing of the Megaport share price on the ASX on the trading day before Mike Klayko's appointment as a director being $11.78 and the issue of up to 100,000 Megaport shares on exercise of those options to Klayko as detailed in the explanatory memorandum. The directors abstain in the interest of corporate governance from making a recommendation in relation to Resolution 1. The proxy votes received in relation to the resolution are now on screen. Voting exclusions apply resolution as set out in the Notice of Meeting: 40,274,134, for; against, 63,291,025; discretionary, 99,390; abstained, 36,222. Resolution, grant of options to Melinda Snowden. Now we go to resolution of -- sorry, now we go to Resolution 2, in regards to grant of options to Nonexecutive Director, Melinda Snowden. For Resolution 2, I ask for you to consider if in favor, to pass the following resolution as an ordinary resolution. That for the purpose of ASX Listing Rule 10.14 and 100,000 options with an exercise price equal to the closing of the Megaport shares on ASX on the trading day before Ms. Melinda Snowden's appointment as a director being $14.99 and the issue of up to 100,000 Megaport shares on issue of those options to Ms. Snowden as detailed in the explanatory memorandum. The directors abstain in the interest of corporate governance from making a recommendation in relation to Resolution 2 26 and abstaining 36,222. Resolution 3, grant of options to Glo Gordon. We now turn to Resolution 3 regarding the grant of options to Nonexecutive Director, Glo Gordon. For Resolution 3, I ask for you to consider if in favor, to pass the following resolution as an ordinary resolution. That for the purpose of ASX Listing Rule 10.14 and for all other purposes, shareholders approve the grant of 100,000 options received in relation to the resolution now on screen. Voting exclusions apply to this resolution as set out in the Notice of Meeting: for, 40,278,965; against, 50,296,690; discretionary or open, 900,676; abstained, 36,322. I will now take questions on Resolution 1, 2 and 3. Celia?

And can make it difficult to hold off voting until all questions are answered. So we'll vote and change if answers allow. In relation to the question that has come through from the Australian Shareholders' Association. The question is, does the written agreement on the nonexecutive directors' terms of appointments include a minimum shareholding requirement?

For me, I'd say that directors will actually effectively buy the equivalent amount of stock that they receive, the remuneration had they would like to see directors buy stock at that level. Is that what they're saying?

Yes, that's correct. I mean would you like me to...

No. I don't think I'll do.

It was just a clarification from the Australian Shareholders' Association to ask do you have a minimum shareholding requirement of 1 year fees?

No. No, it's -- I'd find it a bit ironic. There's a conflict that I want directors to be independent and thought, yes, they also want them to then also guarantee they invest all the remuneration and buying stock. I don't understand. So no, there's no requirement.

There are no further questions that have come through.

Thank you. So that really concludes the discussion of the items of business. In a couple of minutes, I will close the voting system. As a reminder of the online voting instructions is now on screen. Please ensure you've cast your vote on all resolutions. I'll now pause for you the time to finalize those votes. [Voting]

Okay. Voting is now closed. The results of those votes will be released to the ASX later today. On behalf of the Board, I'd like to thank you for your attendance and participation online today. Thank you for your interest in the company. We look forward to your ongoing support. Please stay safe, and I wish everyone the best of health. And I hope we'll have the opportunity to meet you face-to-face at our AGM later this year, This does bring the proceedings to an end, and I now declare the meeting closed. Thank you.