Annual General Meetings (AGMs) offer shareholders the opportunity to exercise their statutory rights and discuss important company issues with the Executive Board and Supervisory Board. In the meantime, the first AGM season since the new law introducing virtual AGMs after the pandemic came into force has come to an end. The AGM in its new structure was the subject of the current survey of DVFA Investment Professionals. Multiple answers were possible for the first three questions.
Interest in the annual general meeting is rather restrained – despite online format
More than half of the respondents (55%) state that they did not follow any AGM at all in 2023. 36% of respondents confirm that they followed one or more AGMs online; 23% attended in person. 8% of respondents made a speech in the online format and 11% in the presence format.
Possibility of submitting questions in advance – a loss of information content?
The second question was aimed at the new legal possibility of submitting questions in advance, so that the answers are made available in writing in advance. The majority (48%) believe that the Annual General Meeting will lose information content if only follow-up questions and questions on new matters may be asked at the meeting itself.
More than a third believe that advance submission increases the quality of the answers (38%). Almost as many respondents, however, think that the supply of information is divided and the importance of the Annual General Meeting is diminished (36%).
More presence of foreign investors about increasing the attractiveness of the AGM
The expectation that the virtual AGM format could increase attendance rates does not seem to have been fulfilled. At the same time, foreign institutional investors continue to be underrepresented.
Asked what companies can do to change this, a clear majority of 68% would like to see AGMs made more attractive and more substantial. Bringing Capital Markets Day and the AGM closer together could help.
On the execution side, 43% would like to see the chairman of the AGM ensure that there is a link to the agenda and prevent digression.
The DVFA Investment Professionals vote with 34% for a more attractive design also for foreign investors via e.g. the reduction of language barriers.
Easier access through online transmission
45% are in favor of online broadcasting of AGMs in person; 31% are in favor of barrier-free online broadcasting for all interested parties.
Fewer respondents are in favor of a restrictive approach. Only the speeches of the Board of Management and Supervisory Board should be freely available and the general debate should only be able to be followed on the shareholder portal – this is the opinion of 11%. Slightly more, 14%, think it is sufficient if the event can only be followed by shareholders on the shareholder portal.
Reasons for lower level of participation via speeches
The number of speakers at AGMs continues to decline: virtual AGMs lack an audience and atmosphere; there is no visible applause from shareholders for the speakers. 34% see this as the cause. In contrast, 25% speculate that there is no particular reason for the lower number of speeches.
Twenty-six percent suspect that the agglomeration of dates is the reason. The more complicated technical requirements for speeches are seen as an obstacle by 14% of respondents.
The ideal general meeting should not be longer than four hours
When asked about the ideal length of an event, 64% said it should last no longer than four hours. Four to six hours is still tolerated by 31%. Longer periods tend to be unattractive (only 5% consider six hours or more to be ideal).
Hybrid formats are the winners
More than 80% welcome the introduction of hybrid formats, i.e., the option of attending in person or online.
82%: Yes, I think hybrid AGMs are useful.
9%: No, I think the format is useless.
10%: I don’t have a dicided opinion.
Strengthening the AGM through more input and transparency
The last question asked what significance the Annual General Meeting should have for shareholders. 60% advocate a discussion with the Board of Management and, if applicable, the Chairman of the Supervisory Board regarding strategy and business model as well as other important topics for the company. 28% would like to see similar functions to an investor day with a strategic agenda. The fewest DVFA investment professionals, 12%, are satisfied with merely formal resolutions with an agenda in accordance with current legal requirements.
“The hybrid AGM, which allows both attendance in presence and online, is the preferred AGM form of the respondents. However, interest in the AGM as an information pool does not seem to be as high as it should be. This could be countered by making it more attractive or reducing access barriers. On the other hand, the legally created possibility for issuers to submit questions in advance did not convince the respondents. Their vote shows that there is still room for improvement in the optimization of the AGM as a whole, especially with regard to increasing the information content and transparency,” summarizes Dr. Vanda Rothacker, member of the DVFA Governance & Stewardship Expert Committee.
Source: DVFA Monthly Question of 12 September 2023
Graphics: DVFA e.V.
Title Image: Unsplash
