• Daisy Powell-Chandler

Reputation and your AGM: it matters more than you think

Listed companies are required to hold an annual general meeting (AGM) every year, within six months of their end-of-year reporting. For decades – centuries? – these have been dry affairs covered primarily by the investment press and discussed otherwise largely for the quality or dearth of refreshments. Over the past decade, AGMs have evolved and it is increasingly common for AGMs to hit the headlines. Rising shareholder activism first on executive compensation and then across the whole environmental, social and governance (ESG) landscape has made AGM preparations more tense and ever-more important.

Why so? The largest, institutional, investors have always used the influence that they have to coerce action from leadership. This was discussed in shareholder roadshows and face-to-face meetings the whole year around. But AGMs provide some additional ingredients:

  • An opportunity for the voices of smaller shareholders to be heard – who are perhaps more likely to hold views focused on one particular issue, be that climate change or human rights, as opposed to big funds that must engage across a huge range of topics.

  • A key moment for investors large and small to come together and, potentially, co-operate. Bringing together so many professional stakeholders in one room is at once both an opportunity and a cause for anxiety.

  • A concrete moment of leverage. During the rest of the year, investors face a stark decision – to agree or sell – which can feel a very lopsided power dynamic, especially if the share price is currently healthy or the investor’s shareholding relatively minimal. At the AGM the playing field feels more level. Now the executive wants something too: their compensation packages foremost but other important issues may also be at stake.

  • And, increasingly, press coverage. If firms are canny and lucky, investor relations are carried out behind closed doors during the rest of the year but now the press may well be watching. It is akin to washing your y-fronts in public.

All of this means that annual general meetings have become a catalyst for changes in both reputation and strategy. Barclays is a great example here: shareholders have used the press coverage around AGMs to push the bank to divest from fossil fuels and for changes in personnel. In the run-up to this year’s meeting shareholder Sherborne Investors questioned whether Chief Executive Jes Staley should remain in post given links to disgraced U.S. financier Jeffrey Epstein. Meanwhile a motion put forward by investor group ShareAction called on Barclays to set, disclose and evaluate targets to “phase out” financial services to fossil fuels, energy and utility companies. The motion failed (it gained support from 24% of the attendees) but still created real change: in response, the bank put forward a new climate resolution, pledging to align all activities with the goals and timelines of the Paris agreement on climate change - beginning with the energy and power sectors. This gained 99.9% support.

Enter the pandemic: Covid-19 is an existential crisis that is impacting all sections of society. Beyond the devastating effects of the virus itself, the strict but necessary measures imposed by governments to control the spread and save lives have already created major disruption to the workplace, markets and everyday activity within the city. Companies are struggling. Profit warnings, job losses and restructuring are already part of the daily business news. Yet we are simultaneously demanding more: lauding companies that offer additional support to employees, pressing them to give away products or payment holidays, demanding that a scattered, working-from-home, crisis-pressed leadership be magnanimous and savvy and strategic.

In this environment, effective communication with stakeholders is crucial and the AGM now holds an important place in the arsenal of any comms team. But lockdown makes real world meetings impossible to deliver. Some companies have so far postponed meetings but will soon face pressing regulatory requirements to go ahead even as lockdown continues. This creates a challenge – how to enable these meetings digitally. Other companies have pressed ahead online only to face criticism for their approach: too little opportunity to ask questions, or shareholder contributions pre-vetted in a manner that creates suspicion. Negative coverage has started to pop up in the Financial Times with increasing frequency.

This is a reputational minefield, especially during a time when demands for transparency, democracy and a move to stakeholder capitalism were already coming to a head. If one finding emerges clearly from the confusion, it is this: that AGMs can and must be an integral part of an organisation’s reputation strategy. Instead of using this pandemic as a temporary reprieve from shareholder activism and democracy, the best companies must think about how an online solution can open up their agenda to a wider audience - to burnish their credentials, rather than threatening them. Plus, if we think about AGMs as an opportunity, then organising them and the requisite documentation will start to feel like less of a pain in the butt and more of an additional annual chance to tell your side of the story.


Need help measuring or improving your reputation? Want to talk more about AGMs and annual reporting? Get in touch

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