It’s not often that shareholders receive a hard copy of an annual report
and notice of meeting before it has been reported on in the media. But
that’s exactly what happened with the controversial outfit Babcock
& Brown this morning.

The aggressive investment bank were obviously very proud of their past year because there were two copies of the 2005 annual report
and notice of meeting in my PO Box at 8am today. This was well after it
had been lodged at lunch time on Friday and was missed by most
mainstream media outlets.

The Babcock annual report has been the most anticipated of all reports
for 31 December balance date companies and I’ve already booked my
flights for the AGM on May 26 at the Four Seasons in Sydney. Just like
Macquarie Bank, it is incredibly issues-rich company for journalists,
analysts and shareholder activists alike.

Executive pay has
sky-rocketed again, the non-executive directors will be getting a juicy
pay rise to almost $300,000 this year and there is a slew of
resolutions to approve the issue of various equity incentives to
different directors and managers of the company which last year paid an
average of almost $1 million to each of its staff.

The total pay
pool reached $421 million in 2005 – $300 million in bonuses and $121
million in base pay – as global staff numbers rose from 455 to 642 over
the 12 months to 31 December. Macquarie Bank pays at about half this
level on average, although there are bigger bonuses right at the top
given both Allan Moss and Nicholas Moore cracked $18 million last year.

The
Babcock annual report launches a new marketing look for the company,
but the poo brown cover isn’t particularly appealing. However, they
won’t be in the poo at the AGM because the share price has soared from
$7.98 on debut in October 2004, to $17.95 this morning.

The
company has certainly increased its debt and risk profile over the
year, but the market has been sold by the story as audited net assets
of $1.11 billion are dwarfed by today’s market capitalisation of $4.4
billion, although they doesn’t include the valuation of several hundred
million dollars worth of unexercised options or performance rights
which are well in the money.

Peter Fray

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