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Many a boss will sympathise with HSBC as the bank mulls ditching physical annual general meetings. Traditionally associated with retirees scarfing canapés while griping about abominable service in the Sevenoaks branch, AGMs offer little of the transparency and accountability that is their theoretical objective.
True, attendees vote to prove or reject a roll call of board proposals on executive pay, equity issuance and the like. But by far the lion’s share of votes are already cast, usually electronically and by a handful of players.
That is in large part to the rise of index investing. Three big asset managers — BlackRock, Vanguard and State Street — hold sway over the FTSE 100 and the S&P 500. Efforts by the trio to give their retail investors a greater say can inevitably only go so far, offering circumscribed options.
BlackRock for example has extended a pilot scheme offering some investors in its $554bn iShares Core S&P 500 ETF a suite of choices. Generally, though, decisions are likely to be farmed out in the other direction: to in-house hubs and proxy advisers such as Institutional Shareholder Services, majority owned by Deutsche Börse Group, or Glass Lewis.
Activist investors, whose swollen stakes afford them a louder voice, are also agitating for change well before any AGM: proposing and then voting on new board members, say, or share buybacks.
Assume, then, in-person AGMs are the preserve of retail investors and irksome NGOs who turn up to harass corporate bosses on civic issues such as the environment and human rights. In Japan heckling turned into such big business — bosses paid sokaiya to stay away or, alternatively, to hassle their rivals — that AGMs now largely cluster around a single week.
There is also evidence that, at least in Britain, shareholders’ appetite for AGMs is dwindling alongside the bag lunches.
All this helps explain why HSBC is not the only company to be considering worming out of the AGM ritual. Marks and Spencer’s cack-handed attempt to do so after the pandemic abated backfired, but drugmaker AstraZeneca is among those pushing towards digital only. UK regulators are reviewing the issue. Over in the US, almost 30 per cent of companies hold their annual meetings in virtual-only format, according to Computershare.
For all that, there is something to be said for the physical AGM. It does corporate bosses good to get up close and personal with their individual owners. At worst, a drubbing from the retiree with 200 shares is low-cost market research. And if they have to take the odd egg yolk, that is all part of the CEO deal.
