RUTH SUNDERLAND: Boards Must Learn To Love The AGM

RUTH SUNDERLAND: Boards need to learn to love the AGM, there’s more to them than banners and curled-crust sandwiches: they’re a linchpin of shareholder democracy.

  • The General Shareholders’ Meeting is a unique event in the corporate calendar
  • The annual meeting is usually a mix of student demonstration and town party.
  • Young protesters mingle with older private shareholders and everyone gets a say

By Ruth Sunderland for the Daily Mail

PUBLISHED: 4:50 PM EDT, May 8, 2022 | UPDATED: 6:54 PM EDT, May 8, 2022

The AGM is back with a bang. During the pandemic, most annual general meetings were held digitally, no doubt to the secret delight of many presidents.

Much easier to control proceedings in a virtual meeting than having to deal with shareholders and their awkward questions in person.

Even before Covid, some companies seemed reluctant to find a real, living investor.

Put in place: The great thing about AGMs is that any investor, or member, in the case of a mutual, has an equal right to be heard.

Gambling giant Entain liked to hold its meeting in Gibraltar, which made it much less accessible to small UK shareholders; an embarrassing stance for a FTSE 100 company.

The AGM is a unique event on the corporate calendar and the current season has been filled with fireworks.

Earnings announcements are usually dry business. But the annual gathering is usually a mix of student demonstration and town party. Awakened young protesters mingle with older private shareholders and everyone can express their opinion.

At Barclays, activists harassed the president and some glued their butts to seats to make it harder to knock them over. There were pay disputes at Ocado and GSK and drama at Just Eat, which announced the resignation of its chairman and an investigation into an executive just before the meeting began.

Large shareholders try to interact with boards behind the scenes, so it is quite rare for a large institutional investor to speak out.

When it happens, as in 2018 when Aberdeen Standard’s then-managing chief addressed the room at the Persimmon meeting about former boss Jeff Fairburn’s inflated salary, it can have a powerful effect. The great thing about AGMs is that any investor, or member, in the case of a mutual, has an equal right to be heard.

Ordinary savers like John Higgins, a longtime member of the LV mutual insurer, can challenge the board.

Higgins already garnered huge support ahead of this year’s LV meeting for a no-confidence vote on the chief executive over his chaotic attempt to private equity the insurer.

Of course, there is no excuse for violent or rude behavior by shareholders.

However, protest at an investor meeting is often a sign that a company hasn’t listened. Confronting the directors at the AGM is the theater of last resort.

It would be profitable for the boards to listen better. Forward-looking investors in their assessment of risks to the global economy are often frontline concerns that have yet to penetrate broader awareness.

Protests over pollution, climate change and, going back, apartheid, are now part of the mainstream, but they aired early on in boycotts and actions to influence businesses. Many American companies see the positive power of AGMs in building their brand and use the meetings as spectacular marketing events.

One of the most memorable ones I attended was for Starbucks in Seattle in 2016. Shareholders enjoyed a rock concert (Alicia Keys performed) and a political rally, with founder Howard Schultz criticizing Trump politics.

There is no British equivalent to Warren Buffett’s Berkshire Hathaway AGM in Nebraska, a weekend festival for investors, like Glastonbury with spreadsheets.

Boards here seem to view AGMs as a bit of a nuisance at best, where even if there are no protests, they have to chat with retirees over the buffet. In fact, AGMs are an opportunity for boards to gain valuable insight. At M&S, the meetings are famous for small investors who provide criticism on underwear and fashion.

Private shareholders can pose penetrating questions that embarrass City analysts.

Boards must learn to love the AGM. There’s more to them than banners and curly crust sandwiches. They are a linchpin of shareholder democracy.