On Friday, we explained the extraordinary profits for hundreds of
Macquarie Bank executives over the past year. We’ve now gone back six
years and crunched the numbers. The table below lists the total number
of options issued in each financial year, the average strike price, the
total cost assuming all of them have been exercised and the paper
profit assuming they’ve all been retained, based on this morning’s
price of $63.29.

This isn’t the complete picture as the executive directors have been
issued millions of options outside the general employee options scheme
which this table covers. Similarly, the biggest gains would have come
from the options issued in Macquarie’s first three years as a listed
company after it debuted at around $6 in 1996. We’re still chasing
those figures, but the paper profits over the past six years are now a
staggering $1.6977 billion.

To pocket these gains, the Macquarie staff will have to write out
cheques for $1.3887 billion. We doubt there is another Australian top
100 company that has such a huge staff ownership component and, if
anything, it’s gaining momentum as the 10.3 million options issued last
year was the biggest since 1999-00.

Remember, all these gains are on top of the stratospheric cash bonuses,
which topped $1 billion last year, paid by the aptly named Millionaire
Factory. Is it any wonder the commerce student we met at the Macquarie
AGM said that all his colleagues aspired to work for the bank?

Year Options Issued Strike Price Total Cost Current Value Paper Profit
1999-00 10.56m $19 $200.6m $668.3m $467.7m
2000-01 5.195m $24 $124.7m $328.8m $204.1m
2001-02 6.673m $35 $233.5m $422.3m $188.8m
2002-03 7.658m $31 $237.4m $486.4m $249m
2003-04 8.354 $29 $242.3m $528.7m $286.4m
2004-05 10.3m $34 $350.2m $651.9m $301.7m
Total 48.74m $28.50 $1.3887bn $3.0964bn $1.6977bn

Peter Fray

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Peter Fray
Editor-in-chief of Crikey