Bad AGMs and how to avoid them

'All the world's a stage, and all the men and women merely players.' William Shakespeare

On Thursday evening, I spoke at an enjoyable professional development event, jointly arranged with Charles Russell Speechly (CRS) and the Quoted Companies Alliance. It was arranged as a dummy AGM, with regular pauses for discussion amongst the attendees and comment from the panel of lawyers, an investor and myself. The exercise gave those CRS partners who took the parts of disruptive shareholders, corporate representatives and trade union officials the opportunity to demonstrate their acting abilities. I should especially congratulate the ‘trade union official’ with his flat cap, dodgy northern accent and, presumably, whippet and bicycle parked outside. Their contributions were not so far-fetched when you consider what I have seen shareholders actually getting up to at AGMs. We didn’t have any streakers on Thursday, nor was there a pantomime horse seeking admission (given that both ends proved to be shareholders, it was allowed in until it got bored and started to be disruptive).

More seriously the session prompted some useful discussion of the issues raised and got me thinking about: how to cope with a significant corporate representative without the necessary paperwork; whether the press should be allowed to attend the meeting or not; and how to deal with disruption. For me, the solution is always preparation, preparation, and preparation.

The key individual at the AGM is the chairman and it is critical that he or she manages the meeting effectively. Gifted by common law, statute law and the articles of association, the chairman has almost tyrannical powers but these must be exercised in the interests of those attending the meeting.

As one advisor put it to a new chairman before a potentially fraught meeting, 'if you do what the company secretary tells you, when the company secretary tells you, without argument or debate, you might just get through this thing'. That might be an exaggeration, but it is important that the chairman keeps to the extensive script that will have been prepared, and does not go off-piste. Every line will have its purpose – including ensuring that everything is covered that has to be covered by law and that advantage is taken of any safe-harbours provided by law around the answering of questions. In many cases the chairman and board will be on a stage at the AGM – it is certainly one occasion in the year when they are all on public display. They should remember that those who most often appear on a stage are actors, and if they do not stick to their script they tend to have fairly short careers. There is a significant risk that the same can happen to chairmen.

There is another similarity here – actors spend a lot of time in rehearsal. If your chairman needs rehearsal, it is worth taking the time. I have seen chairmen who chaired AGMs well, and chairmen who chaired AGMs - let's be charitable and say less effectively. None of this is any reflection on how well they chair the board – they are different skills, and there is also a ‘husting’ atmosphere to a contentious AGM with which some deal better than others. If the chairman is not absolutely confident of handling shareholders, practicing the Q&A the night before the AGM without the ‘actors’ asking the questions being overly deferential, is a good use of time. The three most disastrous AGMs I have seen have one feature in common – the Chairman got rattled and departed from his script.

Further reading? See ICSA's guidance for the effective management of AGMs.

Peter Swabey is Policy and Research Director at ICSA: The Governance Institute

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