New data has revealed that the number of investors attending annual general meetings (AGMs) increased massively last year.
So, why are investors taking more of an interest in how the businesses they invest in are being run? Let’s take a look.
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What is an AGM?
An AGM is an annual meeting at which shareholders with voting rights can vote on company decisions. For example, this may include voting on board appointees or a bonus awarded to a senior executive.
AGMs sometimes make headlines when shareholders make unexpected decisions. Such decisions could include voting against a CEO’s pay rise, for example.
Just last month, retailer WHSmith hit the headlines when shareholders refused to back a £550,000 bonus for its CEO, Carl Cowling. The bonus would have been paid on top of Cowling’s normal salary. It’s been suggested shareholders voted against the award because WHSmith benefited from government support during the Covid-19 pandemic.
It’s worth bearing in mind that senior shareholders don’t have a monopoly on voting at AGMs. If you’re an individual investor with only a couple of shares, perhaps purchased through a retail investing account, it’s often possible to have your voice heard too.
How has AGM attendance risen over the past year?
According to Lumi, 480,505 shareholders and guests attended business meetings around the world last year. This is 70% higher than the number of attendees in 2020.
Lumi’s data also highlights how, in the first half of 2021, there was twice the number of attendees at meetings compared to the same period a year earlier. There were also twice as many messages sent in these meetings over the same time frame.
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What’s the reason behind the increase in attendees?
Kerry Leighton-Bailey, director of shareholder engagement at Lumi, suggests that the substantial increase in shareholder engagement last year is mainly down to increased flexibility. She explains: “Companies are running more meetings across the year than ever before – in many cases, organisations ran two or more meetings in 2021, including a shareholder engagement day and an AGM. Many organisations are also in the process of devising a hybrid calendar or events. This is part of greater efforts to engage with all types of stakeholders throughout the year.”
Leighton-Bailey continues: “Crucially, hybrid meetings form the backbone of 2022 strategy. Hybrid meetings have also become the primary way for shareholders to attend AGMs, which means location and timing of the meeting become less of a barrier to attendance.”
Interestingly, Leighton-Bailey suggests that increased stakeholder engagement is set to continue this year, as hybrid engagements become more common. She explains: “With many organisations already planning hybrid AGMs for 2022, this flexibility and shareholder engagement is set to continue.
“Shareholders, just like the rest of us, have virtual meeting fatigue and in some cases want to use the opportunity of an AGM to physically attend. Alongside this, the benefits of remote participation will remain, so the onus is on organisations to provide a flexible solution that suits everyone.”
What else is behind the increased interest in AGMs?
As well as the increased flexibility that remote AGMs offer, it has also been suggested that increased attendance at these meetings has been down to investors taking a growing interest in how they expect companies to behave – especially with regard to social issues.
According to public relations company Citigate Dewe Rogerson, 21% of organisations said they had witnessed a rise in engagement with ‘activist investors’ over the past year.
With social issues regularly leading news bulletins, it’s perhaps not surprising that investors expect organisations to behave responsibly.
If this trend continues, companies that don’t prioritise social issues may soon find themselves becoming less popular among shareholders. For more on this, take a look at The Motley Fool’s guide to environmental, social and governance (ESG) investing.
