Update on remuneration arrangements

On 31 March 2009, Macquarie Group Limited (Macquarie) announced proposed changes to its remuneration arrangements consistent with global remuneration and regulatory trends, which were proposed to be submitted for shareholder approval at Macquarie’s 2009 Annual General Meeting (“AGM”).

Two subsequent events have impacted Macquarie’s ability to implement the proposed changes to its remuneration arrangements as originally envisaged, being:

• the proposed changes to the taxation of employee share schemes announced in the Federal
  Budget on 12 May 2009 and revised in a consultation paper released by the Federal
  Government on 5 June 2009; and
• the Federal Government’s release on 5 May 2009 of proposed legislation concerning executive
  termination benefits (together, the “Proposed Legislative Changes”).

As a result of these events, Macquarie advised the market on 21 May 2009 that it was in the process of assessing the impact of the Proposed Legislative Changes and would update the market when it was in a position to do so.

Macquarie is currently in the process of finalising its 2009 Notice of AGM and as at the date of this announcement, the Proposed Legislative Changes have not been finalised. As a result of this uncertainty, Macquarie will defer implementation of its proposed remuneration changes and, accordingly, will not seek shareholder approval of the proposed changes to its remuneration arrangements at Macquarie’s 2009 AGM.

Once the final legislation is enacted, Macquarie will make a determination of its impact on the proposed remuneration arrangements and a decision will be made at that time as to whether any modification of the arrangements is required and whether to proceed with seeking shareholder approval of the proposed changes.

In the meantime, interim remuneration arrangements will remain in place, pending finalisation of the proposed remuneration arrangements:

• 2009 retained profit share for Executive Directors, equivalent to the proposed retention levels of 50 per cent (55 per cent for the Chief Executive Officer) of each Executive Director’s 2009 gross profit share allocation, will be held in cash;
• 2009 retained profit share amounts for other staff will remain in cash;
• Prior year retained amounts for Executive Directors will remain notionally invested in the Directors’ Profit Share Plan; and
• The consideration of option grants to Executive Committee members will be deferred.

These arrangements will be subject to review as the situation becomes clear. Depending on the timing of the final legislation, shareholder approval could be sought at a special general meeting to be held later in 2009, the beginning of 2010 or, if there is no certainty regarding the Proposed Legislative Changes until 2010, at Macquarie’s 2010 AGM.