Under proposed plans, Macquarie
will boost the number of shares issued as part of salaries, in a bid to
more closely align their executives' pay with shareholder returns.

The
bank also plans to scrap an original proposal, to issue its top ten
bankers, including chief executive Nicholas Moore, with a greater
number of options as part of their remuneration package.

However,
the bank has now ruled that it would replace the options with shares
with performance hurdles after the government implemented changes in
the May budget around the taxation of options.

The remuneration
shake-up requires investor approval, which will be sought at a
Macquarie general meeting in Sydney on December 17.

“If
the approvals sought by Macquarie are not obtained, Macquarie will need
to consider other alternatives,” a statement said today.

“This
will likely result in higher cash payments to executives and reduced
alignment with shareholders in at least the short-term.

“There
could also be increased staff uncertainty regarding future remuneration
arrangements, which may impact Macquarie's ability to recruit and
retain staff at a key time in the post economic downturn recovery.”

Macquarie proposed to implement wider reforms earlier this year, but the plans were put on-hold after the budget changes.

Chairman
David Clarke said granting the bank's staff more performance-based
shares instead of boosting direct cash payments gave more incentive to
boost the share price.

“Macquarie's approach to remuneration has
been to align the interest of shareholders and staff over the short and
long term,” Mr Clarke said.

“It has also been key in attracting and retaining quality staff.

“More
specifically, Macquarie's remuneration approach encourages staff to
focus on earnings growth and return on equity over the medium and
longer term while appropriately managing risk.”