Have public company AGMs changed due to Covid forever?

The second quarter of the financial year heralds the season when public companies must hold their Annual General Meetings and communicate directly with shareholders, a process widely loathed by senior executives far and wide.

Before the rise of shareholder activism in the last decade there was a trend by some boards to openly thumb their nose at this requirement by ASIC.

For example, former listed advertising agency STW was one of a number of listed businesses that took great pleasure in attempting to hold each AGM faster than the year before. The chairman would speed read a perfuntuary speech, declare no board changes and then have the private roadshow for financial analysts and big shareholders.

The rise of shareholder activists such as Stephen Mayne started to make this a very risky strategy with real share price and reputational implications.

Covid has changed things again and its quite possible that it won’t ever quite go back to the way it was before. As a physical meeting is deemed too dangerous for contagion the trays of triangle sandwiches for hoards of pensioner shareholders on an outing are gone, replaced by slick online presentations and very easy control of Q&A.

The online AGM is not just cheaper than hiring a hotel room, but it is also easier to control the message you want to send. No protests by environmental activists at the front of the venue, and no footage of an angry pensioner asking why the CEO keeps getting more and more money, even though the share price has fallen.

Will this state-of-affairs continue once it’s safe to have physical AGMs once more? To some extent I believe it will. While the requirement for a physical AGM will return and the allure of stale sandwiches will always prove too great for some, our acceptance of a virtual world is far greater than it was two years ago.

Many AGMs were already partly virtual before COVID and I expect the online AGM version will take over as the dominant meeting.

Boards will probably encourage this because online is a far more controlled environment and the chance of surprises greatly reduced. ASIC can regulate it, but as it stands the ability for executives to quietly moderate shareholder live questions and completely control the message is substantial.

It does raise the question. Is there any point to live AGMs at all?

What do you think?

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