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Panic at the AGM: When stakeholders show up


Tim Cohen is editor of Business Maverick. He is a business and political journalist and commentator of more years than he likes to admit. His freelance work has included contributions to the Wall Street Journal and the Financial Times, but he spent most of his life working for Business Day. After a mid-life crisis that didn't include the traditional fast car, Cohen now lives in the middle of nowhere in the Karoo.

Many years ago, I decided, more or less on a whim, to attend the Rembrandt (now Remgro) annual general meeting. It was, for various reasons, quite an experience.

First published in the Daily Maverick 168 weekly newspaper.

I didn’t own shares in Rembrandt and there was no particular issue on the go but I had never attended an AGM in person before, so I thought it might be a learning experience. Neither did I arrange beforehand with the company secretary, as I should.

I have to say, the Rembrandt team could not have been nicer. I explained who I was, and they were welcoming to a fault. There were roughly 30 people in the small auditorium, and everybody – I mean everybody, including a group of Japanese investors – was smoking. And I mean really smoking.

That included Johann Rupert, who was chairman and host of proceedings. He spoke briefly in his wandering, assertive way about the company, chain-smoking as he went.

Rembrandt’s results were solid and the small group listened dutifully, and nobody asked a single question. Rupert asked for votes on all the resolutions, including on the remuneration of board members, and there was unanimous assent, which was hardly surprising because, unlike many other companies, board fees were minuscule.

Dirty little secret

There is a dirty little secret about AGMs: in broad terms, companies don’t really want shareholders to attend, at least in South Africa. They certainly don’t want members of the public to attend, and they definitely don’t want journalists to attend. The code is: get it done, get it done quickly and quietly, get the resolutions passed, and go home.

Technically, annual general meetings are there for the owners of the company to review the state of the company. Hence, they are typically restricted to shareholders. But they are statutorily required, so companies do have to go through the motions.

To get around this problem, activist shareholders typically buy a few shares in companies just to get access. Some journalists have done the same in the past, but because they are typically rote affairs they are kinda dull.

In my experience, in South Africa, if you ask a company whether you can attend as a journalist, they are usually happy for you to come so long as you don’t turn it into a press conference by asking strings of questions – or any questions at all.

Virtual AGMs

The issue popped up this week when two fund managers, Sygnia and NinetyOne, were less than forthcoming about allowing journalists to attend and Business Day carried a story about it. I think the story was a bit miscued: AGMs are technically there for shareholders, not the general public, so it’s standard practice for companies not to invite the media. But I think the general issue the article makes is valid and interesting.

There is a big change that has happened, inevitably technological: virtual AGMs. One of the ways companies try to reduce attendance is by holding them in out-of-the-way places, like wine farms in Stellenbosch. But when AGMs are virtual, it’s quick and easy for shareholders to listen in – and, horror of horrors, exercise their voting privileges.

The big reason companies don’t want shareholders to attend is that there is now a vote on executive remuneration, and that is turning into a bit of a bunfight.

In general, South Africa’s corporate execs get eye-popping salaries, which are sometimes well earned, but a lot of the time you do wonder. And then there are occasions when they are so truly out of whack there is really nothing to wonder about.

The fact is, companies better get used to the idea of AGMs becoming very, very different affairs. Former CEO of the JSE Nicky Newton-King tweeted in response to the kerfuffle, “Imo, AGMs should not just be for the conduct of statutory business but also for a company to account publicly for its activities. If one truly accepts the NB of stakeholders, that accounting should be to all interested stakeholders, not just to shareholders #nothingtohide”.

I think she is right. Companies need to turn their AGMs into opportunities to explain their strategy, including the full gamut of stakeholder issues. US car company Tesla puts its AGMs on YouTube – they are great fun; the latest one has been watched by half a million people.

For better or for worse, that is the future. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.


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