Virtual agms show little regard for small investors

Cantillon: Public companies shun probing questions with short, selective online agms

For the boards of public companies, one of the upsides of the coronavirus pandemic has been their ability to move to virtual annual general meetings (agms). The same cannot be said for small investors.

A report completed in recent weeks 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 recent months: 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.

Obstacles to questions

Schwartz-Ziv found a little over a third of questions posed by shareholders to companies at virtual agms in the US this year were answered at the meetings or afterwards.

Some 55 per cent of those who attempted to file questions faced obstacles and, in 32 per cent of meetings, shareholders weren’t able to submit questions at all.

“Analysis of transcripts and recordings of in-person and virtual shareholder meetings in 2019-2020 shows that, relative to in-person meetings, the overall time of virtual meetings is 18 per cent shorter, and 29 per cent less time is spent by firms on answering each question,” said Schwartz-Ziv.

Indecent haste

It would surprise if the results of a similar exercise across Irish publicly traded companies were any different, judging by the way chairmen rattled through proceedings with indecent haste on most of the calls Cantillon joined during the agm season.

While companies make sure to keep close to big institutional investors throughout the year, agms are the only occasion where smaller guys can put boards on the spot. It’s very difficult for a chairman to avoid a tricky follow-up question from a pesky shareholder unhappy with an initial response when in full view of other investors and reporters.