Virtual AGMs: Food for thought

Date: July 7, 2020

First published in Straits Times on 5 July 2020

With no free lunch to think of, shareholders can now focus on asking about the firm’s financial performance and prospects

A public relations consultant with many years of work experience in England and Australia once told a senior financial journalist that at all the annual general meetings (AGMs) he had attended in those countries, “most small shareholders who showed up were more interested in discussing the quality of food served”.

He did qualify his comment by adding that at times, top management’s remuneration was questioned at AGMs and other serious issues were sometimes debated, but by and large, shareholders of British and Australian companies were likely to have had food more than anything else on their minds when turning up at those once-a-year corporate gatherings.

Older readers of this newspaper might be able to relate to this anecdote because when the Securities Investors Association Singapore (Sias) was founded in 1999, the caricature of the food-obsessed Singapore shareholder was well-known.

One can’t blame them because some company bosses were even flying in for these AGMs high-quality ice-cream from overseas. It is no exaggeration to say that many shareholders attended AGMs for the free meals only, and had little interest in asking difficult questions.

I was asked by a number of company bosses how they could stop the unsightly behaviour of some attendees who rushed for food even before the end of the meeting.

Once, I even observed a grandmother who had her maid and two grandchildren with her, demanding that they be fed because “I came for AGM and I couldn’t cook today, so, give us all food”.

However, in fairness, there were a handful of astute shareholders who understood the annual reports and raised pertinent issues at AGMs and the food lovers simply put the responsibility of asking questions on the shoulders of these few, provided they did not ask too many questions.

Part of the reason was the absence of reliable, concise information – there was no Internet then, so shareholders only had company announcements and the annual report to rely on, which were usually thick, voluminous documents that were difficult to plough through.

Companies were also not keen to spend time on presenting their business strategies and financial performance. In the 1990s, it was more of a “social encounter” than an accountability mission. Hence, the focus instead was on the quality of the menu at AGMs.

This was a shame because AGMs are meant for shareholders to question their managers on important matters like how the companies performed over the past year, the adequacy of dividends proposed and paid (if any), board composition, remuneration, the company’s strategies and outlook.

As time passed, many companies were advised by Sias on not only how to manage the food situation at AGMs but also how to improve the quality of their meetings and shareholder engagement.

We made it very clear that AGMs are events where shareholders exercise their right to seek accountability, and not about the quality of food.

Over the years, Sias has been increasing its efforts to educate shareholders on understanding the annual report and how to properly enjoy the maximum benefit from attending AGMs. I have been receiving accolades from chairmen of meetings to say that their shareholders have been asking intelligent and useful questions.

Sias has been conducting training for shareholders on how to interpret and understand annual reports. Since 2016, it has also been helping shareholders with Q&A on annual reports, which covers corporate governance, business strategies and the financial statements of a company.

Our researchers send questions on these three areas to several companies ahead of their AGMs. These can be found on Sias’ website, together with the answers received.

There has been an encouraging rise in responses from the companies.

Shareholders should also familiarise themselves with these questions ahead of the AGM and seek answers from the company at the meeting itself.

The coronavirus pandemic has rendered past considerations for companies completely irrelevant as all AGMs will now have to be conducted in the virtual realm because of the ban on large gatherings.

This might be disappointing to some, but virtual AGMs do have a major advantage over physical ones – shareholders who might have wanted to ask questions before but shied away from standing in front of a crowded room should have no such qualms this time because online meeting platforms allow questions to be submitted in advance.

Also, those who do attend will do so out of a genuine desire to ask questions and learn about plans companies have to deal with the crisis.

In other words, the meetings should be very focused, with the discussion concentrated on financial performance and prospects.

With corporate survival likely to be at stake, individual shareholders must run through their concerns about the company’s daily operations and strategic plans and be prepared to raise them at the AGM.

Even without food on offer, there should be plenty on the plate during this round of AGMs for everyone to chew on.

• The writer is David Gerald, founder, president and chief executive of the Securities Investors Association Singapore.