What to look out for this AGM season?

In person and online, stages are being set for the biggest annual event on Australian listed companies’ corporate calendar.

What to expect this AGM season? The KWM Corporate M&A team has pulled together a quickfire list of seven points to watch, and five key issues for every company to consider as they prepare…

What to look out for this AGM season? 

• Persistent lines of shareholder questioning, on topics such as climate or broader ESG issues, or on technical procedural issues like whether you’ll provide a transcript of the AGM on your website. We included a list of the sorts of procedural questions you might like to prepare for in our latest AGM report.
• Other shareholder disruptions, like the protestors at the Woodside AGM in Australia earlier in the year, and the Shell AGM in the UK, which we’ve written about elsewhere.
• The COVID-19 situation, and whether it may still cause issues for companies planning to hold in-person or hybrid meetings this year.
• Shareholders continuing to use their votes on remuneration reports to vent their frustration on other issues. We already saw that earlier this year, with the ACCR’s Australian climate lead encouraging shareholders to vote against remuneration reports and the re-election of directors where they are dissatisfied with the company’s climate approach.
• Continued frustration regarding proxy advisor reports, and lack of consultation with companies prior to proxy advisors releasing those reports. We saw that at the Santos AGM earlier in the year where the chairman told shareholders one proxy advisor report was “materially flawed”, noting issues with benchmarking.
• More Say on Climate votes, with eg BHP, Rio, Santos and Woodside’s Say on Climate votes so far passed by shareholders (in one case narrowly).
• Continued opposition to proposed constitutional amendments including virtual meeting only provisions, as we’ve written about elsewhere. Already in the first half we saw such amendments not passed by shareholders of one ASX200 company, and another ASX200 company release a follow-up announcement after proposing the amendments to clarify that fully virtual meetings would only be held in exceptional circumstances.

What should ASX-listed entities do to prepare?

• Consider how any physical venue can be safely accessed and what security arrangements and screening procedures will be in place.
• Consider whether it is appropriate to have a COVID-19 vaccination policy and whether you should be asking for proof of vaccination status.
• Consider your guidance to shareholders around questions. More companies providing shareholders a better opportunity to ask questions also facilitates abuse of this process, for example by allowing activist shareholders to move between AGMs virtually and ask the same lines of persistent questions that distract from the business then being conducted in the meeting. Consider reminding shareholders to be respectful in their questions and ask them to limit their questions to a maximum period of time to enable other shareholders to ask their questions. Some companies are also moving to taking questions all in one lot, at the beginning of the items of business, rather than separately in relation to each item of business.
• Have a back-up plan in the event the COVID-19 situation requires a pivot to a fully virtual meeting, or violent or disruptive behaviour occurs. ‘Future-proof’ your AGM notice for this possibility. What is appropriate will depend on your entity’s constitution and the circumstances. The AGM plan should address foreseeable circumstances and responses, including whether an adjournment to the meeting should be called.
• Prepare your chair, with clear guidance on how to respond to the common procedural questions being asked (see the list we included in the Appendix of our Deep Dive into ASX200 AGMs in 2021 report) as well as expected questions based on stakeholder engagement. Ensure chair scripts and pre-AGM rehearsals are updated to cover these sorts of issues.