How to make the most of AGMs
Be prepared and make the most of your attendance at Annual General Meeting
That time of year is upon us again – the AGM season. If you have attended one, you were probably one of the majority who sat there feeling helpless, not uttering a word for the entire 60 minutes, except for the polite chitchat with the stranger sitting next to you.
The whole meeting pretty much whirled past in a sea of pomp and ceremony, but if you were lucky, a highlight was an angry shareholder grabbing the roving microphone and firing awkward questions at the CEO. Then you realised he was more than a little unhinged, and perhaps you turned your mind to the post-meeting refreshments: will the coffee be brewed or instant, and will the biscuits be Tim Tams or Anzacs?
I suggest you ask yourself if your attendance really makes a difference. It’s a question I explore in this article, and how to prepare for your next AGM well in advance.
It used to be a special event
Remember the analogue era? Shareholders accessed news about their shareholdings either from the daily newspapers or by watching the 30-second grab on the evening news. But how useful were those sources anyway?
I can hear the cries of the typical TV viewer: “I don’t care that the All Ords is down half a per cent. I just want to know how the share price of Blunt Drill Mining Exploration Ltd is travelling.” The newspapers provided little better. Chances are that unless the story was really spicy, your small and mid-cap holdings got ignored, usually of little interest to the average business reporter.
It basically meant that attending the AGM was a special event. It got you close to the company in a way that was not otherwise possible.
It’s different today, in the digital age. Up-to-date information is never more than a keystroke or screen swipe away. For investors, it has never been easier to keep an eye on what’s going on with their shareholdings.
Take, for example, the ASX website or brokers’ sites, such as Commsec. One feature that gets plenty of use on my Commsec web page is the watch-list facility. You can put in the ASX codes of all the companies you own and once set up, simply hit the announcements option to receive an update on their current news.
Nevertheless, the AGM has not lost its relevance or usefulness.
AGMs still serve a useful purpose
Listed companies are forced to hold AGMs. But unlike the changing of the guard at Buckingham Palace, that does not mean they have become an unnecessary formality. They still serve a useful purpose.
I could give a list of all the formal stuff that has to happen in an AGM (such as the election of directors, appointment of auditor and the transaction of key items of company business, to name a few) but I would rather talk in broad-brush terms.
The fact is that, as a shareholder, you are a part-owner of the business, and the line of men and women sitting behind the fancy trestle table up the front of the auditorium (the management) are, in effect, your staff. Never forget that. They are accountable to you for their actions, and there’s nothing like owners and staff staring at each other eyeball to eyeball to keep a lid on the rhetoric.
Consider also that AGMs are legislated to follow certain protocols, which are important. They help protect against omissions of fact; that is, the ducking and dodging by management of those annoying and unpleasant truths that crop up every now and then.
Do not be afraid to use the AGM as a platform to ask your staff sitting up the front why certain actions were or were not taken. You will get your chance after the roving microphone has been wrestled from the guy that security staff are now trying to remove from the building.
You have a voice, so use it, even if you feel that your meagre shareholding does not carry much weight. The point that you make, if well considered, could sway the thinking of other shareholders who had not considered it. You might be nailing a very important issue.
How technology is changing the format
There is a powerful difference between people talking face-to-face and the cold impersonal communication of the digital world. That’s why I support the idea of hanging onto the traditional form of AGM. Not everyone agrees with me. Increasingly, convenience is trumping old-world values and it could change how AGMs are held in the future.
Two facts lead us to ask if the format of the AGM should be changed. First, a statistic: only 5 per cent of the top 200 companies draw more than 500 shareholders to their AGM. Combine this with the capabilities of modern digital interconnection. It could mean that “attendance” in the future will be from the convenience of your living room.
In fact, it’s with us already. Warren Buffett’s Berkshire Hathaway live-streamed its AGM on the internet for the first time in April. Interestingly, Buffett did not request it for reasons of shareholder convenience or dwindling attendance numbers. Quite the opposite; he did it because Omaha’s Century Link stadium, where the AGM is held each year, could not accommodate the 40,000 people planning to try to get in the door.
If AGMs became exclusively live-streamed it would have its positives and negatives. On the positive side, it would open up access to time-poor shareholders. On the negative side, it would kill personal interaction. So, if things do progress in that direction, I feel it’s important for meeting formats to at least accommodate online participation.
How you can prepare
One of the biggest gripes from chairmen, CEOs and senior management is that many shareholders who get up and ask questions at AGMs are poorly prepared. So if you are going to ask a question or vent your spleen, make sure you know your stuff.
If it’s a financial question, you need to be well versed in the company’s financial statements. Don’t step up onto your soapbox. Don’t be aggressive. This is not a time to get emotional; it’s a time to be cool, informed and factual. That way you will get your best shot at receiving the right answers from the top brass.
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