Platform: The secret to meeting with success at AGMs - Companies need to take care that AGM’s remain an attractive proposition to the smaller shareholder, says Graham Williams

The annual general meeting (AGM) has been the subject of much

criticism.

During the last 10 years, one-to-one meetings between institutional

shareholders and companies have become the norm. This relationship and

large portfolios have made regular attendance by fund managers at AGMs

difficult to achieve.

As a result the meeting has become predominantly a forum for private

investors.

Institutions participate by voting their shares in advance.

Most companies value their individual shareholders and the AGM provides

the only occasion when the company can engage in face-to-face dialogue

with this group. Companies should exploit this rather than see it as a

necessary evil and shareholders should use the event to call directors

to account.

In addition to the formal business, private shareholders have a right to

be given the same information as institutions. So companies should make

a first class presentation, reflecting the issues facing it within the

context of its market. Include current strategy and future policy as

well as comments on the previous year. Encourage shareholders to take

part in the proceedings. Avoid using proxy votes to carry resolutions

without adequate discussion. Even small details help. For example,

companies should ask directors standing for election to introduce

themselves and explain the contribution they hope to make. The Q&A

session can be structured by taking questions received before the

meeting or using cards. Invite shareholders to put their questions and

board members to join the chairman in replying.

The meeting should be effective within an overall communications

programme, the ’owners’ feeling involved rather than ignored and

frustrated. Shareholders who find the AGM stimulating will pass on the

good news; they are also more likely to attend future meetings.

Moreover, media and City representatives will reflect this

sentiment.

Companies should encourage directors to be available after the meeting

to answer questions. Registrars and auditors should be on hand to

assists shareholders. An exit poll could be held to identify what

attendees were hoping for and to what extent their expectations have

been satisfied.

Pre-planning lies at the heart of a successful AGM. Invite questions and

comments in advance to gauge opinion and allow preparation of a

response.

By adopting a positive, proactive approach, companies generate support

for their position in response to special interest groups.

If the AGM is recorded on video, copies can be made available and

included on the company’s web site. Or send shareholders a summary of

the meeting.

Documentation is the best way to involve all shareholders in the AGM,

not only those who attend.

Problems of attendance may find solution in the rapid development of

technology. By using the internet, digital television and video footage,

the AGM could go to investors as well as shareholders coming to the AGM

- more satisfactory, convenient and less costly.

These ideas will not suit all companies, but some can be implemented

with little additional expense. The result will be improved

relationships, better informed investors and more supportive

shareholders - a prize worth working towards. Communications between

companies and shareholders is the essence of good corporate governance.

The AGM can demonstrate a commitment to this process.