Macquarie Bank has been aggressively fighting a rearguard action against proxy advisory powerhouse Institutional Shareholder Services on the contentious question of voting on the Millionaire Factory’s remuneration report at tomorrow’s AGM.

With proxy voting now closed, the bank will be aware just how successful they have been in neutralising ISS which has made mincemeat of other stellar performers like Oxiana Resources, Zinifex and Rio Tinto over the past 18 months.

When ISS tells institutions to vote against something, they usually do, but the New York-based firm might have bitten off more than they can chew in taking on the Macquarie machine.

Macquarie has been discreetly distributing a very detailed rebuttal of the ISS report, which has fallen off the back of an institutional truck at my place. For mine, Macquarie wins the argument based on its record – why change a winning formula?

Sure, the remuneration scheme does include an abnormally large proportion delivered in short term cash bonuses. However, 20% of this is locked up for 5-10 years and all of the executives have large equity exposures through ordinary shares and options.

That said, it is disappointing that, as usual, Macquarie executives are defending their own pay and the independent directors are nowhere to be seen.

The biggest mistake ISS made was recommending voting in favour of last year’s remuneration report, thereby neutralising executive pay as an issue for Macquarie when only 8.677 million shares were voted against – just 6.43%.

Given that not much has changed, this has left ISS open to the charge of inconsistency and publicity seeking — the report was leaked to the press whilst Macquarie was denied a copy. Maybe they should subscribe.

To claim a victory, ISS will to need to at least triple that against vote and Macquarie won’t be troubled if they manage more than 80% of shares voted in favour. Given all the Macquarie arm-twisting and information deluging, it would be a brave Australian fund manager who voted against the machine as retribution might be forthcoming on future deals. However, expect more protests to emanate from offshore shareholders, given ISS has significant international credibility.

Like with any contested election, there will be strong debate about who should and shouldn’t vote. For instance, Macquarie’s top 13 executives own 3.858 million shares worth $356 million — an average holding of $27 million — and much more again is held by other staff and former executives.

Similarly, the shares controlled in the Macquarie wrap products and its ESOP (employee share ownership plan) arguably should not be voted. If they are, analysts should strip the figures out to gauge which way the genuinely independent shareholders have jumped.