In the attached article, Steven Cole FAICD sets out the arguments and opportunities for reinvigorating the AGM.
The Annual General Meeting (AGM) is a critical part of our corporate governance landscape, serving important purposes in the engagement between shareholders and companies and as an accountability measure for boards to shareholders.
Over recent years factors such as the changing technologies available for communication, concentration of share voting power in institutional investors, enhanced disclosure and declining AGM attendance have caused stakeholders to question whether an update of the AGM model is required.
The Governance Leadership Centre asked whether the “tipping point” for the current model of the AGM had been reached in 2015, noting rising director dissatisfaction with its effectiveness.
Almost half (42 per cent) of directors rated the current Annual General Meeting (AGM) system as ‘dysfunctional’ or ‘very dysfunctional’ in the AICD’s recent Director Sentiment Index.
Mr Cole’s article, covers:
- The purpose of the AGM, including its role in board and management accountability, exercise of shareholder voting rights, questioning and the chance to personally see and engage with the board
- Shareholder / investor gains over recent decades, including the enhanced corporate governance practices required through regulation and codes, quality and timeliness of disclosure and communications technology
- Contemporary criticisms of the effectiveness of the AGM, including the diminishment in its information role, most votes being determined by institutional investors prior to the AGM, and the limited attendance at AGMs
- Contemporary suggestions for improving the AGM, including hybrid virtual/physical AGMs and the use of multiple venues, disconnecting information flow from voting, direct voting, changing the timing of proxy vote disclosure, improvements to the meeting information flow, and procedural improvements
- Shareholder Activism, including the influence of minority shareholders.
Mr Cole concludes that shareholder meetings, and the AGM in particular, retain valid and important roles in sound corporate governance practice. Improvements to the AGM process, rather than replacing or removing the AGM from the landscape, are desirable.
“In the call for the review of the future of the AGM, care must be taken not to throw the baby out with the bathwater,” concludes Mr Cole.
Download “The future of the AGM – don’t throw the baby out with the bathwater”.
About the author:
Steven Cole FAICD has over 40 years of professional, corporate and business experience through senior legal consultancy, as well as a range of executive management and non-executive appointments. His extensive boardroom and board sub-committee experience includes ASX listed, statutory, proprietary and NFP organisations covering the industrial, financial, educational, professional services, health and resources sectors. Steven has authored many articles and publications on corporate governance and is a sought after speaker at industry conferences, seminars and workshops with presentations in Australia (WA, NSW, VIC, QLD, SA), New Zealand, Singapore, China, Hong Kong, Indonesia, Sri Lanka, and Mauritius.
Steven is a member of the AICD’s Corporate Governance Committee.
Upcoming member events on “The Future of the AGM”
Continue the conversation at upcoming Directors Briefings on the future of the AGM, in:
An abridged version of Mr Cole’s article was featured in the January 2017 edition of the AICD’s Boardroom Report.