It is 2007 — an era of advanced technology: mobile telephones; cameras and text messaging; the internet; webcasting; and powerful portable computers. Yet the annual general meeting (AGM) was created in an era of horse and coach; pen and ink; limited printing and a fledgling postal service that dictated that members would physically meet with directors annually.

Unsurprisingly, research has confirmed that the AGM in its current form no longer meets the needs of shareholders, with attendance in rapid decline and few seeing it as a timely source of information on company performance and prospects.

At the same time, however, shareholders are demanding greater participation in and engagement with the companies in which they invest.

How then, can the reporting and decision-making functions of the AGM be best achieved in the 21st century? How would the AGM look if we could start again today, from scratch?

We seek your views in this short survey and thank you for your participation.

1. Do you think there is a role for AGMs today?

a) Yes 85%
b) No 11%

2a) If yes, what do you think the AGM’s main role and purpose should be?

To communicate information about company performance and prospects to shareholders (the investment proposition) 41%
To communicate information about corporate social responsibility, sustainability and governance to shareholders 31%
To allow shareholders to raise issues of concern with company management and directors 72%
To provide a forum for shareholder decision-making (ie, voting on resolutions, director elections etc) 46%

Other — please comment:

All of the above. Also bearing in mind that shareholders are the owners of the company, they would be more interested in the returns which they can get on their investment.
Particularly for large listed companies with widely held shareholdings. Much less so for smaller listed companies and unlisted companies where experience shows that very few shareholders in fact attend the AGM.
But limited principally to large listed companies or small ones in certain circumstances when there is a ‘head’ of shareholder concern over an issue. There could be a requisition of, say, 5% of shareholders in small listed companies to allow shareholders access to information about company performance and prospects as not all shareholders are invited to investor briefings.
All of the above are important and all should be dealt with at an AGM or similar formal forum.
Important that the board is actually seen and heard — presentation of accountability.
For directors to explain their actions during the year such as why they may have rejected a takeover offer, why they have entered into a contract with the CEO etc.
I believe there is still a role for allowing shareholders to raise issues of concern and providing a forum for decision-making, and a forum to raise/voice concerns especially on performance and remuneration issues.

2b) If no, please explain why the AGM has no role today:

They are not necessary to achieve any of the above, particularly having regard to electronic communications. They also do not really achieve any of the above — the interaction is generally about matters irrelevant to corporate matters, in particular investors with personal issues in relation to the company, which is a waste of time for everyone else and an inappropriate forum.
All the information discussed at the annual meeting could be done electronically, they are very costly to run and as a rule are poorly attended.
a, b and c above could be held by investor updates rather than being a legislative requirement.
a and b above are done through the annual report and company’s website. Voting can be effected electronically via direct voting. Shareholders should be given an opportunity for interaction with management — say in the company’s premises where this is feasible, but in a less structured manner to encourage dialogue. One of my clients has for the last 10 years concluded its AGM and then run the MD’s presentation which is always a constructive and relaxed exchange of views — the directors are relaxed because they know they can’t be ambushed and so are the shareholders as they sense the change of mood. This is how it should be.
I believe no AGM is required. They are too far away from the real action; continuous disclosure provides more detail on an up-to-date basis for listed companies.

3. Is there a rationale for face-to-face meetings between shareholders and company management/directors today?

a) Yes 87%
b) No 10%

Comment:

Given that management and the board should be accountable to owners, there must be some avenue by which such accounting takes place. To rely on formal reporting mechanisms may lead to a loss of understanding of such accountability and a distancing by management/board from owners.
Shareholders must have the opportunity to have face-to-face meetings with the board and senior management. In my opinion this should occur at least twice a year and apart from the AGM the other meeting/s should be less formal (ie, similar to a broker/fund manager type presentation).
Ultimately shareholders will vote with the ‘back pocket’; however, this often comes at a substantial financial cost. Shareholders need a forum to raise questions, comments with senior management/directors (with the appropriate notices and formalities respected from both parties).
While I have said no to the AGM, this is in technical sense — an investor session involving all board and open to all shareholders, ie, including retail shareholders, perhaps offered by web (and I know current generation of retirees are not all web-literate, but this is changing) provides an opportunity for the owners to see and hear from those responsible for the strategic direction of their company; but no need to have formal business considered at this meeting.
It gives an opportunity to the owners to meet face-to-face with the board and assess the board.
Particularly for analysts and institutions who need to better understand information publicly disclosed by the company. It is also useful to remind directors that they are accountable to and appointed by the shareholders.
Directors/management need to be accountable (to all shareholders who wish to avail themselves of the opportunity) in a public, on-record and at least reasonably transparent forum/manner.
Yes — invite shareholders to company update meetings once a year.
If you use 2 a) above then management can be at the informal updates to meet with investors. In our experience, while we have a retail investor base and are listed, managed schemes are not required to hold AGMs. We hold investor updates where all investors are invited to attend and hear a presentation on performance and sustainability etc and can ask questions but it is not a formal meeting. We find investors look forward to these more informal meetings.
a) Yes – for large listed companies and probably for most unlisted public companies, the latter because this is often the only forum for communication with directors. b) No, not for small listed companies which usually have two or three shareholders attending and occasionally struggle to find a quorum. Too often the meeting is over in 15 minutes and the real interaction if any starts when shareholders may talk to directors over a coffee.
Directors to front up to the questions.
It happens continuously between larger shareholders and company management/directors and the AGM provides an opportunity for smaller shareholders to see directors face-to-face.
It provides shareholders with the opportunity to look directors in the eye and make them accountable for past decisions and the future direction of the company. While webcasting and telecasting of AGMs is convenient it is not as engaging or confronting as a live meeting.
Whether the AGM is the best format for this is questionable. Most dealings between the company and institutional shareholders are, however, done face-to-face either through investor briefing forums or where the company wishes to discuss particular issues with key institutional shareholders (eg, governance, remuneration plans for executives or the board).
Directors are elected by and accountable to shareholders. An appropriately structured AGM provides a forum for review and feedback.
I think the statutory component of the meeting could be handled using online technology ie, re-election of directors, remuneration report voting etc, with more meaningful information meetings held to provide details of the company's performance. All this can be done more efficiently electronically. Major institutional investors do not attend public forums but still need face-to-face meetings.
It allows shareholders and investors an opportunity to gauge and assess management on an ‘at least annual’ basis, after having implemented policies and decisions from the previous year. It is an absolute health check that hopefully keeps (arrogant) directors and management in the real world. ‘A reality check’ — boards should get a feel for shareholder opinions at retail level.
Gain some further insight as to the actual people managing shareholders’ investment. Small shareholders have limited opportunities otherwise.
Does not have to be face-to-face eg, teleconference, but does provide a group forum to raise issues.
There is a need for meetings — for holders that don't like technology, this means face-to-face.
It provides a formal opportunity for the owners of the company (the shareholders) to make enquiries about management, directors, operations, etc that effect their investment.
Directors and management have to be accountable to the stockholders.
No, as a whole group, probably not.
Nothing replaces face-to-face accountability.
I believe any face-to-face meeting makes all parties more accountable (and honest).
Small company communications can receive enhanced shareholder value in the context of direct interaction at AGMs.

4. Which aspects of the current AGM model present the greatest barrier to shareholder engagement? Please feel free to list as many barriers as you like.

Time; location (given the physical dispersion of shareholders); the intimidating format (structure/formal conduct of meetings).
The formality and rigid agenda.
The requirement to disclose the proxy count before each motion is put.
Minority shareholders are blocked by the main institutions.
Location; the number of shareholders; institutional shareholdings; too much ground to be covered at the AGM.
Non-binding remuneration report creates far too much emphasis on remuneration at AGMs instead of a broader discussion of company performance. So-called shareholder activists dominate AGMs today, often with their own agenda.
Inaccessibility for attendance.
1. A notice to be sent physically of the meeting to each of the shareholders. It can be changed to a public notice in newspapers and website to cut cost as well as for e-greening 2. Maybe the distance to be travelled for attending the AGM — it could be simultaneously broadcasted by audiovisual means to the shareholder, at their home/office.
Cost of physical attendance for those shareholders not resident in chosen location; use of formal rules to limit/stifle discussion and the limited content of the AGM; business as outlined in the notice of meeting; perceived need to understand annual report contents in order to raise matters; general shareholder reticence to put themselves in the spotlight.
Tradition.
Location; time meeting held.
Not many shareholders bother to attend. Most prefer to vote by proxy and would rather the expense of running an AGM be put to better use to improve their returns.
I refer to small listed companies (up to $720 million market capital) AGMs — the information that is presented is out-of-date by several months; shareholders can read it on the net when it is released to ASX if they are really interested. The format is usually tedious and the meetings of so little consequence that they are not worth getting out of bed for — literally! Why travel into town from the suburbs for an AGM that may last 20 minutes and comprises tedious resolutions in the main relating to housekeeping items such as the election of directors, refreshing capital-raising ability, a remuneration report on which the shareholders vote is for guidance only, and occasionally voting an increase in directors’ remuneration? Also some chairmen insist on following the tedious process of calling for proposers and seconders of resolutions which unnecessarily prolongs the process and adds to the tedium. This claptrap should be banned as it is meaningless and slows the meeting down. Auditors are required to attend these meetings to answer shareholders’ questions and once in a blue moon that happens — and never in my experience.
Ability of shareholders to raise questions remotely during an AGM.
Meeting question time being hijacked by special interest groups (eg, protesters). Formalities of the AGM may present a barrier to shareholders asking questions. AGM often focused on formalities of voting on resolutions and reporting on previous year rather than an opportunity to communicate the strategic direction for the future.
Shareholders who ask irrelevant or silly questions and thus waste the time of all people present.
Shareholder apathy. Location suitability — companies are increasingly global with global share registers. Agendas tend to be dominated by formal business of the meeting in which shareholders attending may have little input or real interest. That is, there is a feeling of powerlessness by the small retail shareholders attending as proxy voting by non-attendee shareholders (principally by institutional holders) dominates ultimate decisions. There is no real incentive to attend (unless there is an opportunity for ‘a little sport with the board’). The key messages (chairman and CEO’s addresses) are communicated to the listing authorities and to the electronic media at the commencement of the meeting and are therefore generally available to shareholders without attending the meeting. Again, for the reason above, if your input is perhaps not valued or you can't change anything, why attend?
The majority of voting interest and therefore control are often held by institutional or substantial investors who do not typically attend AGMs, or stand up and ask questions to an open/public floor. These large influential investors often bypass the current open/public AGM forum and deal directly/privately with directors or management on issues that concern them. The AGM consequently only hears issues raised by minority holders or their representatives including the Shareholders’ Association which, while valid, do not result in any material change to voting outcomes as institutional and other investors have lodged proxy votes prior to the meeting.
Meeting bound up with the statutory aspects, and shareholder activist disruption. These two stifle the meeting in terms of shareholders finding out how the company is actually performing.
Overly formal — institutions and analysts get different sessions and more detail or internal information is given to professional investors through other means with more proactive data.
Physical — people do not attend and are not engaged.
Over-regulation of topics (eg, remuneration), which impede the interactive flow.
Time of day; location; formality of meeting.
Shareholder travel time if AGM face-to-face. Limited opportunity to discuss serious issues due to time constraints, director reluctance etc.
Meetings being taken over-dominated by interest groups or individual shareholders.
Proxy voting — most retail shareholders don't understand that their vote counts and how they can actually vote by proxy.
Management.
Demystify the process as much as possible eg, allow direct voting.
Obvious barrier is a single location, although technology is assisting with pod casts etc.
Company driven agendas — little opportunity for shareholders to provide feedback (other than questions to the auditor) to companies on non-agenda items.
Generally the inability of shareholders to attend AGMs due to travel constraints.

5. Which option do you most support:

a) Retain the AGM in its current form     8%
b) Retain an annual meeting dedicated purely to ‘formal business’ and provide additional forums and channels for targeted reporting and shareholder communication (eg, informal shareholder briefings, newsletters)    41%
c) Abolish the AGM entirely and use current technology to facilitate all ‘formal business’ and communication functions  10%
d) Other — please comment:

Use technology for formal business after there has been an opportunity in an informal environment for owners and board/management to discuss performance and the company's future.
b) and (c) would only be appropriate for large public companies not for smaller listed companies.
I would propose to have an AGM but with the latest technology — videoconference with board of directors and the shareholders in attendance. With a formal business as well as question hour to ensure that there is interaction which assisted the company in its performance. Also the other part with regard to other means of communication — I would propose a feedback mechanism from shareholders to the company would be more effective than the newsletters etc, which can be just part of the website which shareholder can access.
Retain the AGM in its current form for large listed companies (say those in the top 100). With other companies only hold an AGM if requested by 5 per cent by value of the shareholders. A shareholder meeting should still be required to approve items that require a special resolution or a voting exclusion statement.
Retain an AGM in physical face-to-face form, but provide an electronic mechanism for those able to avail themselves of that technology to have an acknowledged on-record and transparent input. This may also mean allowing the submitting of shareholder questions electronically within a given timeframe before the AGM and considerably opening up the range of matters which can be raised at the AGM.
As at 3 above we prefer an informal meeting of investors as a communication tool. Investors have an ability to call a meeting if there are matters of formal business to be attended to. Perhaps the method of calling this can be made simpler for investors.
There has to be a forum for shareholders to voice their frustration and seek information from management and directors as needed. Possibly shareholders could be invited to vote in response to the notice of AGM and if, say, 25 shareholders and/or 5 per cent of capital required a meeting then the meeting would proceed. The process would need to be varied from now to achieve this of course. Otherwise a direct vote on the issues will suffice and a teleconference can be held to present on the results — this could be held shortly after they are released to ASX and they are current and of interest, not four or five months after the end of the year/or half-year.
I favour a combination of (b) and (c) separating the shareholder meeting from the voting to reduce the formality of the shareholder meeting. Introduction of direct voting outside of an AGM would facilitate this with votes being lodged by mail, fax or via the web. A physical shareholder briefing (and webcast) is held, say, two weeks after notice of resolutions and annual report is released and two weeks before the close of the direct voting. At the meeting the chairman and CEO explain the resolutions, report on the company's performance and future prospects and answer shareholder questions. Shareholders then have two weeks to lodge their votes.
I am not totally convinced about the merits of either, but would probably favour (a).
Use current technology to facilitate all formal business and communication functions eg, direct voting and schedule additional shareholder feedback forums.
Best use of current technology should be used to excite and facilitate all formal business and communication functions as well as the more informal types of communications and meetings.
Establish focus groups of various stakeholders to communicate company outcomes and obtain feedback about the company from these groups, in a continuous revolving communication cycle.
Targeting topical issues and forward focus.

6. If you support the retention of an AGM in its current form, what improvements would you suggest to ensure it delivers better outcomes for shareholders in terms of meaningful interactions between shareholders and company management/directors? Please feel free to list as many suggestions as you like.

Less formality and more meaningful discussions with management about future strategy.
Remove requirement for a non-binding vote on the remuneration report. More support for chairmen to minimise the impact of speakers who are running their own agenda rather than wanting to talk about relevant company matters.
None in particular.
Compulsory presentations (including questions and answers) on the business from managers of the reporting segments (as per the accounts), on risk management, IR, and sustainability; a presentation from the CFO on the accounts. Compulsory — directors singing for their supper when up for re-election and telling shareholders what they contribute to the board and why they should be re-elected.
Make the meetings more shareholder-friendly. Find out what times generally suit shareholders to attend. Allow questions to be taken by the chairman from shareholders either by mail, phone or online enabling more shareholders to participate in the meeting.
I would suggest more participation from institutional shareholders and, to enable that to occur, the AGM would need to be electronically available as institutional shareholders may not have enough time to attend AGMs in person. Then the smaller shareholders may benefit from hearing the type of questions they ask and the answers given.
Have all voting on formal business determined by direct voting before the meeting and announce the results at the commencement of the meeting. Why perpetuate the charade that formal decision-making is determined by those in attendance at the meeting? The meeting could then be a forum devoted to a meaningful (hopefully) interaction between the board and the shareholders.
Don’t support current AGMs but if they continue I suggest implementing (a) direct voting on all resolutions; (b) directors’ qualifications/experience presentation to shareholders on re-election and (c) all questions submitted 24 hours before meeting and formal written responses provided on the top 10 questions/issues/concerns. This hopefully speeds up meeting process, focuses on key shareholder concerns and minimises repetitive/similar questions. Chairman to disallow questions dealt with in the questions and answers.
Presentations by not only directors but senior management.
With the increased prevalence of internet communications, the annual reports could be electronically released along with a commentary that would be given at an AGM. At the AGM a Q&A session would allow shareholders to have the opportunity to ask questions directly from the annual report and the commentary and maybe for more recent updates given the timeframes from an organisational point of view.
Network satellite meetings to ensure reach (use the technology) to shareholders.
Geography is one of the AGM’s biggest hurdles — to have to physically meet on X date at Y destination is just impractical in an era of global shareholders. The response by companies has been the growth of investor relations departments to answer shareholders questions as and when they are asked, rather than saving the queries up for an annual meeting. This seems to be the most logical solution to improving shareholder interaction. There will still be those who want to say something in a face-to-face way once a year, so the AGM can remain the default vehicle for those who are prepared to wait and to hold their queries until then and not put them to the investor relations department. Old habits die hard.
I would like to see less formality but this risks losing control and not obtaining objectives.
Webcasting proceedings of AGM.

7. If you support the division of an AGM into a short ‘formal’ meeting for decision-making, with other informal briefings or communications in place for reporting functions, what would be the greatest barriers to effecting this change (eg, cost of providing separate informal briefings)? Please feel free to list as many barriers as you like.

Cost; timing; and access to technology to allow contact in absence of the board/management having to undergo extensive travelling.
Cost-effective meetings would require holding the informal meeting immediately after the AGM. Same venue.
Cost and time as you may need to hold meetings in other states or countries to ensure shareholders are given every opportunity to attend at least one meeting a year.
Must hold the other informal briefings or communications before the AGM but still allow time at AGM to raise issues arising and any decision-making arising.
Only the additional cost.
I don’t see any real barriers — many companies use teleconference facilities to brief analysts. One of my clients announces the dial-in ASX number and the general public can call in and ask the MD & CFO questions on the running of the company as can the analysts. They publish the briefing paper to which they speak on ASX in advance so that people can follow the paper.
Cost.
Companies would be reluctant to embrace the time and cost associated with two separate meetings. However, by conducting the meetings on a back-to-back basis with an informal meeting followed by the formal voting meeting it would marginally add to the time and cost of an AGM.
Questions from shareholders which may limit the ability of the chairman to keep the briefing short.
Cost and time. Our register is predominately NSW-based shareholders: how do you effectively reach out to shareholders not based in Sydney, are interstate or based overseas? Do you achieve sufficient scale for these additional meetings to make these meaningful in any way?
Venue for informal briefings must satisfy convenience of all shareholders and effort to use modern technology for interactive webcast to/from various locations or by online forum.
Cost would be an issue but as above use of technology would minimise this.
Cost is an issue but so is the inconsistency of attendance; very few investor institutions attend AGMS, they get their info elsewhere.
Utilise technology in terms of teleconferencing, webcasts to join various groups.
The potential for formality to creep in.
Should not be too many barriers in today's technological age. Informal briefings are a good idea with podcasts or internet access to briefing details available to most interested shareholders.
The cost of communicating to all shareholders will increase. If shareholders could opt not to receive anything from the company, even a notice of meeting, then that would help reduce costs. Over 90 per cent of shareholders don't attend AGMs, so they probably don't want to get the AGM communications, and would probably benefit more from regular newsletter-style informative updates.
Timing and market occurrences would be a barrier; however, internet accessibility could well assist.
With the current requirements of the continuous disclosure regime there is already a great deal more communication (such as more informal press and institutional briefings held) during the course of a year than would have been the case historically. This is probably the reason for the poor turn-out at AGMs these days as there is usually not a great deal of new information which comes out at an AGM. Even if there is news it is contained in the text of the chairman and/or CEO's address which is issued to the ASX before the meeting starts; hence another reason not to have turn up to the AGM.
Electronic delivery of reports, statements of company and director performance reports keeps costs to a minimum. Collating feedback and reporting needs to be included.
Shareholder technology participation (eg, internet, email etc) would be the main barrier in my experience.