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AGMs: Preparations, questions, activism, and frankfurters

AGMs: Preparations, questions, activism, and frankfurters

Posted 19 Oct 16 by Ken Weldin

With the footy Grand Finals and the switch to daylight savings now behind us, it must be October. For some this also means Oktoberfest, the start of the cricket calendar and the Spring Racing Carnival.  For our listed businesses of course, it also sees the cycle of corporate reporting continue with their Annual General Meetings (“AGMs”).

In theory, the AGM is intended to be the primary tool for shareholder engagement. However in recent years with increasing institutional voting, the advent of technology and a more geographically diverse share ownership, the future of AGMs has attracted a fair amount of navel-gazing and debate, here in Australia as well as abroad.

Consider if you were to apply that classic rule of thumb to the topic of shareholder engagement and the structure of today’s AGMs:

If you were to start with a blank sheet of paper, would you end up with the process of today?

I suspect you already know the answer.

Why does this matter?

I have been to many AGMs over the years and from my experience these meetings can often be summed up as non–events, typified by low attendance and low engagement from shareholders.

Others however are memorable for all the wrong reasons.

  • Poor management of the basics from a failure of the audio-visual technology through to not having enough seats behind the top table for all the directors to sit comfortably, giving an unprofessional appearance.
  • Lack of preparation to understand the mood of investors leading to rushed or ill-judged answers to shareholder questions which can make for uncomfortable listening and viewing.

This second point is particularly relevant given the report issued last week by Arnold Bloch Leibler and Activism Insight regarding the rise of shareholder activism in Australia.

Some organisations have tried to breathe new life to their meetings by exploring hybrid physical and online meetings or virtual meetings using streaming technology. Digitising meetings and streamlining the related documentation is front of mind for all.

Others hold more traditional investor relations days adjacent to the more formal AGM which showcase products and services as part of a ‘customer experience’ focus.

Overseas, Daimler’s attempts here fell flat when a fight erupted at the AGM over what was called a ‘frankfurter fracas.’

Despite all this, AGMs in their current form are still with us and will be for some time as AGM reform does not appear to be an immediate priority of our government following the abolition of CAMAC.

It therefore remains the case that a well organised AGM with no technical hitches and a strong, confident and inclusive approach to both Q&A and shareholder engagement reflects well.

And of course, vice versa would apply.

How to prepare for an AGM

Think about your organisation’s context as you prepare for your 2016 AGM. Do you fall into one of these categories?

  • Newly listed company post an IPO.
  • Company reporting financial performance below analysts' expectations or out of synch with sector peers.
  • Organisation going through structural change, acquisition or divestment activity.
  • Company with exposure – both direct and indirect – to a key industry or economic risk, trend or event (oil prices, interest rates, environmental concerns).
  • Company facing the prospect of a first or second strike against their remuneration report (Computershare reported that in 2015, 113 companies received a strike; of these 91 received a first strike, compared to 85 in 2014).(1)
  • Board who has had to handle adverse or unwelcome publicity during the year – a sign of increasing for on ESG (environmental, social and governance) interest.
  • Company with an active or emerging shareholder /interest group.

If you have one or more of these factors, then you should prepare your AGM strategy and plan for questions around them. In doing so, clear, simple language is important as well as consistency around how you have disclosed information to the market previously.

Take care when using jargon or trying to explain away events as 'underlying, normalised or exceptional.' ASIC, the market and investors will see through it.

What can you do?

  • Know the shareholder /investor groups who are tracking your shares. Engage with them and engage early and often.          
  • Understand what the focus areas for these groups and the questions they are asking your peers. 
  • Determine whether the Chair will take all questions on behalf of the Board or whether some be delegated to the CEO or Committee Chairs (if on a specialist topic, audit, remuneration).
  • Always be ready to explain your remuneration strategy. The remuneration report is the one section of the annual report you can virtually guarantee will be read by all participants.

ASX companies facing a second strike will know this well as will BP, Smith & Nephew who amongst others, suffered votes of over 50% against their remuneration reports in the most recent UK AGM season.

These examples tell you however that if you are explaining remuneration for the first time at the AGM, it is probably already too late.

  • Know what is – and what is not – in your corporate governance disclosures.
  • For directors standing for (re)election, be able to discuss how they will add value to your Board, how their other directorships will not compromise their ability to do so and if /how the appointment advances the diversity agenda. After remuneration, board representation is the next most frequent topic for shareholder activists. 
  • Test the audio and visual technology at the venue. And then test it again!
  • Ensure the right number of seats are at the top table for the directors, and have the name cards in the right position.

This year’s hot topics?

While every company may not face a question on these topics, it would be surprising for the following hot topics not to feature during the 2016 AGM season.

  • What impact or fall out does the Board see from the Brexit vote or the outcome of the US election?
  • What positon is the company taking on the marriage equality debate given recent moves for a plebiscite?

Given the heated debate this year around ‘corporate culture’:

  • How would you describe your culture?
  • What steps have you taken to improve it?
  • How has this changed from last year?
  • Do you have any bonus or remuneration arrangements that could be described as ‘soft’ or ‘flaky?’


As with many things in life, sometimes it is better to be over-prepared rather than to look back and wish you had done more in advance on these topics.

Where will you be this year?  Need a new approach to planning for your meeting?  I would love to hear from you.

(1) Computershare: Insights from Company Meetings in 2015, March 2016


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