Virtual AGMs are slow to pick up Article icon

Virtual

When home builder Taylor Wimpey planned its 85th annual general meeting, it had envisaged a gathering of around 100 shareholders and journalists at the Grade II listed BMA House, designed by the famous architect Sir Edwin Lutyens, in London’s Fitzrovia. 


But the event on 23 April was rather a different affair. While newly appointed chairman Irene Dorner, chief executive Pete Redfern and company secretary Alice Marsden pitched up at Taylor Wimpey’s High Wycombe-based headquarters, ensuring a quorate, shareholders were provided with dial in numbers to join the meeting if they so wished.


As shareholders could not vote in real time, it was neither a virtual event nor a hybrid AGM - which meant that the company did not require any changes to its Articles of Association to host the event. Shareholders were able to listen to the proceedings and pose questions beforehand, which Dorner read out, grouped together in categories, and answered before opening the meeting to the floor. Four additional questions were then posed. 


But Taylor Wimpey was bucking the trend. ShareAction, which campaigns for responsible investment, claims that two out of three FTSE 100 AGMs will take place behind closed doors this year,  meaning shareholders will not have their say. It is calling for all FTSE100 companies to hold virtual AGMs this year to allow shareholders to hold their boards to account.

 

Writing to the FTSE 100 companies’ chairmen, ShareAction’s director of corporate engagement Simon Rawson said: ‘This is not a moment to hide away. The Covid-19 crisis has seen the value of pension assets and shareholdings fall sharply. Management teams are making vitally important decisions that will affect the long-term success of companies, as well as the lives of their workers and customers.’

 

British American Tobacco (BAT) is one of the companies holding a closed door AGM. Simon Cleverly, group head of corporate affairs, explains: ‘At BAT, the safety and welfare of our employees and partners is a top priority. As a multinational FTSE company, our AGM requires several months of planning, and while we understand that the UK government is considering introducing new legislation to modify the way in which AGMs can be held, we have yet to see any announcement. As such, we have based our planning on the existing regulatory framework.’

 

Michael Kind, campaign manager at ShareAction, accepts there can be good reasons for such an approach. He explains: ‘Some companies don’t allow for virtual AGMs in their articles. And there has been a lack of urgently-needed regulatory clarity to reassure companies that they can hold virtual AGMs despite this.


‘For companies that haven’t pursued this alternative, the lack of commitment may come down to lack of time to make alternative arrangements and a disappointing lack of motivation to create appropriate avenues for shareholders to engage with boards. We applaud the companies in this position who have taken steps to organise a separate virtual shareholder event.’

Sadly for ShareAction, the response to its letter has not been overwhelming. ‘We’ve not had that significant a number of responses yet - approximately ten, which is disappointing,’ reveals Kind. ‘We really want to make sure that boards are taking corporate accountability seriously at this time. Those that have replied have been receptive and emphasised their commitment to shareholder democracy, but have cited time constraints and their articles as barriers to holding a virtual AGM.’