AMP’s annual general meeting was a grand affair in a grand setting.
The Savoy Ballroom at Melbourne’s prestigious Grand Hyatt Hotel was packed with hundreds of small shareholders wanting to hear how their crisis-ridden company had gotten itself into so much trouble, and what their board (or what was left of it) was going to do about it.
The meeting was a complete stitch-up for those who had taken the time and trouble to attend, and it highlighted everything that is wrong with company annual general meetings.
In fairness to AMP, this story could be about any Australian publicly listed company.
Unfortunately for AMP, this writer happened to be in the Savoy Ballroom last Thursday to watch the stitch-up unfold.
Why was it a stitch-up?
Because, as happens at every annual general meeting of a big Australian-listed company, all the major decisions had been taken before the meeting.
The votes on the day were meaningless.
Institutional investors rule the roost
AMP, as I am sure you are aware, is reeling from the scandals revealed at the banking royal commission.
Shonky financial advice, lying to ASIC, doctoring a so-called independent report into the bad behaviour.
The chairman and chief executive had already resigned; three directors were up for re-election at the AGM.
All wanted to stay, but the big institutional investors had other ideas.
Their proxy votes cast before the AGM meant that Vanessa Wallace and Holly Kramer knew they had been voted off the board.
They both understood there was no point turning up to the AGM and pleading their case — there were not enough votes in the room to save them — and so quit rather than face public humiliation.
The same with the Remuneration Report — 61 per cent against, a record no vote, and it was all decided before the AGM.
Again, the hundreds of people at the AGM had no say.
But they should have.
AMP is a company with about 750,000 shareholders, most of them colloquially known as “mum and dad” investors, who would have received their shares when the company demutualised in 1998.
Those mum and dad investors own around 70 per cent of the company.
Yet the so-called “big” investors, with just 30 per cent of shares, pull all the strings (the largest of which, in AMP’s case, is US-based investment house, Harris Associates, owning just under 5 per cent).
Big investors get access to chairmen and CEOs that small investors don’t, and they vote by proxy before the AGM.
They don’t go to the meeting and vote with everybody else.
AGMs treated as a ‘compliance exercise’
According to the Australian Shareholders Association, which represents mum and dad investors, listed companies show a lack of respect to small shareholders.
“This is the one day of the year small investors have to hear from and ask questions of their board, yet directors treat it as a compliance exercise, something to be got through,” ASA chief executive, Judith Fox, told the ABC.
“Boards don’t encourage shareholder participation, they don’t reach out to their shareholder base.
“Now is the time to step up to the plate and do it differently.”
Like an overhaul of the proxy system.
Proxies were first introduced for company AGM’s back in the 1920s when transport and communications were a shadow of what they are now, and there could be very valid reasons why shareholders could not get to meetings.
But, in today’s digital world, there is no reason at all why shareholders can’t vote at the same time, even if they are not all physically in the room.
As an example of digital technology at work, at the AMP AGM, chairman Mike Wilkins took questions online from people watching the meeting on the web.
The Shareholders’ Association’s Judith Fox believes fund managers asking their questions from the floor of the AGM would be a great help to small shareholders, who may not have the same understanding of the issues.
At the moment, company annual general meetings are carefully stage-managed charades where chairmen offer well-worn platitudes about how the board serves the shareholders, how they’re sorry when things go wrong and how the board takes collective responsibility.
And the charade continues as chairmen preside over votes on resolutions in the full knowledge that they are a complete waste of time because the result is already decided.
Then there’s the issue of shareholder engagement.
With three quarters of a million shareholders, the Melbourne Cricket Ground should not be big enough to accommodate AMP’s AGM.
The fact only about 300 turned up would indicate the vast majority are disenfranchised and recognise the AGM, in its current form, is a waste of time.