AICD round table: Virtual AGMs unsatisfactory, hello hybrid

Company directors believe virtual annual general meetings have largely proved “unsatisfactory” for engagement with retail shareholders.

Amcor chair Graeme Liebelt at the AICD round table: ‘You’re not really engaging with your shareholders.’ Picture: Britta Campion

Company directors believe virtual annual general meetings have largely proved “unsatisfactory” for engagement with retail shareholders and predict a future hybrid model will emerge where a blend of the physical and virtual will open AGMs to a wider group of shareholders while retaining director accountability.

As part of the federal government’s COVID-19 response last May, Treasurer Josh Frydenberg made temporary changes to the Corporations Act, allowing companies to hold virtual meetings and electronically execute documents for six months.

Since then almost all ASX 100 companies have held virtual meetings, which while opening access to a wider pool of shareholders than ever before, have proved unhelpful for director accountability and access to directors for retail investors.

“You can get the business done very effectively and without any sort of challenge. However, to me feels a bit unsatisfactory in that you’re not really engaging with your shareholders as much as you would wish, and particularly retail shareholders,’’ said Amcor chair and ANZ director Graeme Liebelt.

The Australian Shareholders’ Association (ASA) has raised concerns about retail shareholders being unable to access online AGMs due to poor internet connectivity or physical constraints, as well as reduced feelings of accountability.

However the Governance Institute of Australia has pushed hard to make the allowances for both virtual meetings and e-documents permanent. “I think the key here is making sure that retail shareholders have access,” said BlueScope, Fortescue and Dexus director Penny Bingham-Hall.

“I have seen AGMs and participated in ones where, a bit like Graeme, I felt it was a bit unsatisfactory, that it was very easy to just take a whole lot of questions online, consolidate them, and deal with them very efficiently. Very efficiently would be a polite way to say it,’’ she said.

She believed a hybrid platform would emerge where meetings would be simultaneously held in-person and virtually.

“The technology is evolving to make it a lot better for everyone. And maybe a bit like Zoom meetings, maybe shareholders can actually come up on the screen and ask you a question.

BlueScope, Fortescue and Dexus director Penny Bingham-Hall: ‘I think the key here is making sure that retail shareholders have access.’ Picture: Britta Campion

“I’m sure we’ll come up with an efficient way of doing it that doesn’t stymie retail shareholders from actually getting access and asking the questions they want to ask,’’ she said.

Coles director Wendy Stops said virtual meetings had eliminated the problem of physical meetings being held in one city that might be inaccessible to a number of investors.

“There’s a lot of people that can’t physically travel. So I think it’s opened up the opportunity to a lot of people to participate, provided they can deal with the technology, which is another issue when you’re dealing with elderly investors, but provided you can deal with that, I think it has given a very broad opportunity,’’ she said.

The virtual meeting, she said, had also removed the opportunity for AGMs to be hijacked by vested interests.

“In both a bank world and a supermarket world, you do get a lot of what I would loosely call stirrers who come to your AGMs,” Ms Stops said.

“In a virtual environment it minimised that happening. And part of it is, I think, because they just don’t have the physical platform to be able to ask the same question 20 times or to wheel people in there who were going to be stirrers or hecklers or whatever the case may be,” she said.

“So I viewed that as a positive, certainly from the organisation‘s perspective, and just focus the meeting on what the true investors really want to ask and what they really want to deal with, as opposed to getting bogged down in maybe people protesting or other things going on.”

Coles director Wendy Stops: ‘I think it’s opened up the opportunity to a lot of people to participate, provided they can deal with the technology.’ Picture: Britta Campion

AICD chief executive Angus Armour said the law should be agnostic on whether companies held physical or virtual meetings.

“This will evolve and that‘s true if the law is agnostic. As long as people are compelled to hold physical forums, it’s more likely it won’t evolve, that people will revert to what’s been done in the past. And that might seem desirable and convenient now, but might look even more archaic in five years’ time,’’ he said.

“I do believe the accessibility issues needs particular emphasis from two lenses. Firstly, it provides a whole community of people who are either physically, or for other reasons, unable to attend one location access, which is fantastic. But the other dimension for me is that we presume that it‘s the older people who will want to have that face-to-face encounter. And I’m mindful of an experience in financial services where they decided to start closing off branches. And one of the feedback was there was actually the younger people who wanted the branches rather than the older people, because once the older people got used to the pattern and the rhythm, they were actually very happy to do things online.

“The thing is, if it does evolve to make it accessible to older people, just transitioning that generation to another way of engaging and making it vibrant and actually engaging, then I don’t think that will be an accessibility issue. That won’t be a challenge.”