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The head of Macquarie’s booming commodities business, who was paid more than JPMorgan chief Jamie Dimon and 75 per cent more than the Australian financial group’s own chief executive last year, is to leave this month after almost three decades.
Nick O’Kane had been one of Macquarie’s most feted executives after a modest bet on the US energy trading market was transformed into its largest and most profitable division.
Chief executive Shemara Wikramanayake said O’Kane, who joined Macquarie 28 years ago, had made a “massive contribution” building up the energy trading business and that he was leaving the financial services company to pursue other opportunities “for a range of personal reasons”. Simon Wright, a 35-year company veteran, will replace him.
The Commodities and Global Markets division that O’Kane has led since 2019 was a relatively obscure part of Macquarie’s operations only three years ago, but volatility in the energy markets due to extreme weather and Russia’s invasion of Ukraine has generated enormous profits.
Its better-known asset management and banking operations have been overshadowed, and the story of how a Sydney-based company became one of the largest oil and gas trading companies in North America and Europe has become a case study in how to create value for both investors and executives.
O’Kane, alongside fellow executive Andrew Downe, led the 2005 acquisition of Cook Inlet, a small Californian energy player, as they bet on US energy trading in the wake of the collapse of Enron. That business has grown into a global leader in energy trading, logistics, storage and finance and generated A$6bn (US$3.9bn) of net profit in the year to March 2023, compared to the A$4.3bn of the combined asset management, banking and capital divisions.
Tipped as a potential Macquarie chief executive, O’Kane had become one of Australia’s best-paid executives as the commodities business boomed, taking home almost A$100mn in the past two years.
His A$58mn pay packet last year was more than that earned in the same period by JPMorgan chief Jamie Dimon or David Solomon, chief executive of Goldman Sachs. His earnings reinforced Macquarie’s reputation as “The Millionaires’ Factory”, where executives are rewarded for taking risks that pay off.
Jon Mott, an analyst with investment bank Barrenjoey, said that the departure of the “highly regarded” O’Kane was a surprise.
His exit comes as Macquarie issued disappointing third-quarter results and warned that overall net profit for the year to March 2024 would be “substantially below” last year’s, as deal flow fell to its lowest level in a decade.
Macquarie is both an asset manager — buying assets ranging from water utilities to telecoms networks and real estate assets — and an investment bank advising on deals.
Wikramanayake said that dealmaking remained slow, with fewer buyers for assets emerging. Nonetheless, she said that it remained a “good investing environment” for investors with “dry powder” to spend.
John Storey, an analyst with UBS, said that the results read poorly “across the board” in the third quarter, which would trigger downgrades in expectations.
Macquarie shares dipped 2 per cent on Tuesday following the results.