Investor distancing must not be new normal as virtual agms get under way

Richie Boucher, a veteran of some acrimonious annual general meetings (agms) during his time as chief executive of Bank of Ireland, has been able to maintain an element of investor distancing as chairman of CRH in these Covid-19 times.

The banker was appointed to the helm of the board of the building materials giant early last year and presided over a second virtual shareholder meeting on Thursday, as agm season across Irish listed companies kicked into gear this week.

While investors, who traditionally turned up in large numbers to CRH agms in a Dún Laoghaire hotel overlooking Dublin Bay, were offered a chance to submit questions in advance of the meeting, the group received none. An opportunity for shareholders to type up questions online for Boucher during the audiocast also yielded nothing. The meeting lasted 18 minutes as the chairman, figuratively and literally, went through the motions.

Food giant Kerry Group's webcast agm on the same day may have been twice as long, but only marginally more engaging – with those that logged on to it treated to a still image of chairman Philip Toomey as he read out his speech.

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Again, no questions were submitted before the agm, though four that came in during the meeting took all of five minutes to run through. The most interesting one, asking about the recent breakdown of Kerry's talks to form a dairy joint venture with Kerry Co-Op, was met with a "no comment".

Elsewhere, on Friday, Smurfit Kappa's chairman Irial Finan managed to wrap up proceedings inside of 15 minutes without having to deal with any questions from pesky shareholders – either submitted before or during the cardboard box maker's annual meeting.

Retrograde step

Welcome to a second year of virtual agms – aided by temporary laws introduced at the height of the Covid-19 crisis last year. The Government has indicated it sees the whole exercise as a trial run, echoing considerations in other countries. But allowing electronic meetings to become the new normal would be a retrograde step.

Enshrined in company laws across the world since the middle of the 19th century, agms were designed allow shareholders in a company to gather and listen to the chairman’s remarks on a business’s performance and prospects, ask questions and vote on various resolutions based on what they had heard. For decades, however, most of the shareholders who turn up at agms, in ever-decreasing numbers, have been small investors. Large institutional types typically submit their votes in advance, by proxy – giving boards the comfort of knowing the outcome of various resolutions before the small guys even take their seats.

It’s a very rare day when a resolution is shot down, though large investors – fired up by proxy advisory firms – have become more exercised since the global financial crisis about excessive executive pay. (The Government here transposed European Union laws last year making say-on-pay agm resolutions mandatory, choosing to use discretion given to member states and allow such votes to be advisory, rather than binding.)

But in a world when large asset-manager and pension-fund investors are kept sweet by regulators, cosy tete-a-tetes and behind-the-scenes consultations, the agm remains the only place where the small investors can hold boards to account.

Retail shareholders

A report last published last autumn by Miriam Schwartz-Ziv, a lecturer in the finance and banking department of the Hebrew University of Jerusalem, backed up a niggling suspicion among many who have dialled into virtual agms in early 2020: that many companies had little regard for retail shareholders as they, by and large, asked for questions to be submitted in advance, allowing them – at best – to cherry-pick which ones to answer.

Agm season can be time-consuming and tedious for those such as corporate advisers, PR reps and reporters – who have to do the rounds of public limited company meetings between April and May every year. But investors who take the time out to turn up and put boards under the cosh with probing questions – particularly those who refuse to yield the mic when the chairman has not given a proper answer – are to be admired, even if some may deviate from the business of the meeting.

The back-up presence of those who just turn up for the tea and sandwiches – or, if they’re lucky, some fancy pastries – helps keep some element of shareholder democracy at play at a time when directors are increasingly inoculated from the real world.

Dalata Hotel Group’s agm on Thursday has been among the better ones so far as it at least offered a live video feed of chairman John Hennessy and other board members and executives from one of its hotels in Dublin’s south docklands.

“I very much hope we won’t have one of these hybrid meetings ever again,” he said at the end of an agm that barely breached half an hour.

It’s not just the managers of Dalata’s business meeting rooms who will agree.