Madeleine Cordes
Client Director, Company Secretariat, EQ
Client Director Madeleine Cordes advises on actions the Company Secretary can take to ensure that the Company is well-prepared for an AGM. Effective engagement with shareholders is particularly important at the Q&A section of the meeting.
The FRC Guide on Board Effectiveness encourages the participation of shareholders in the meeting through the Q&A process and this is where good communication can really bring benefits.
Madeleine talks you through a successful approach.
An AGM Q&A Document
Planning ahead by preparing likely shareholder questions and responses is time well spent to help the Board feel confident and well-prepared when they arrive at the AGM.
The task is often led by the Company Secretary with the support of the Investor Relations team and external PR advisers.
Companies may receive questions before the AGM (and may indeed have proactively encouraged this in your AGM mailing or through any online portal). This may be beneficial as answers can be discussed and agreed with the Board before the actual meeting.
It is recommended to prepare a suggested Q&A document which can be included in the AGM document pack for the Board. This should be alongside the Chair’s script and the pack should be circulated in good time so that directors have time to absorb the contents.
It is helpful to include a trading update or Chair’s statement in the proceedings at the AGM as often this will pre-empt questions by already having covered them off.
The Shareholder Agenda
This year, as AGM season is now well underway, we have already seen many questions raised at AGMs in line with the current shareholder agenda on:
- Climate change and net zero ambitions
- Dividends
- Share price
- Board tenure and diversity.
It makes sense to be prepared to answer these questions should they be received at your AGM.
There will be specific questions relating to the financials, borrowing, future investment needs, impact of interest rate increases, operations and business of your company and the current market for your particular sector so make sure these are included in your Q&A document. You and your PR advisers may need to work with other functions in your business such as Finance, HR, Investor Relations, and any Environmental team and draw responses from your latest Annual Report when creating your Q&A document.
Managing Questions On The Day
Here are some issues to consider when it comes to the AGM itself.
Members and their proxies will usually have the right to speak at the AGM - according to your Company’s Articles provisions on general meetings - so you need a policy which has been agreed with the Chair as to whether others can ask questions.
Senior Subject Matter Experts To Hand
If you have a very large AGM, it may make sense to plan to have a “back room” of employees from the relevant areas connected to the top table to help directors give comprehensive answers to any questions asked at the meeting. An BSL interpreter should also be provided to ensure accessibility for shareholders.
With the development of hybrid virtual and face-to-face meetings, technology can be used to capture questions prior to the AGM by online attendees in real time and face-to-face attendees on arrival. These questions can be grouped to ensure there is no duplication. Marks & Spencer has appointed a shareholder advocate in the past to help manage the process more efficiently.
The Board needs to know that inside information must not be disclosed when responding to questions as this must be made available to all shareholders.
Questions which need thought, and some research, can always be answered after the meeting with a clear indication as to how the answers will be provided.
Have A Plan To Manage Time For Questions
You may need to set deadlines for shareholders to meet in answering questions, limit questions from each shareholder, have a cut-off point (balancing this with shareholders’ rights to ask questions) and also manage a queue of shareholders wanting to ask questions at an AGM with a large shareholder attendance. It will be the Chair’s role to manage this with support from the Co Sec team, to ensure that a broad range of questions are covered and to refer questions to other directors and Chairs of the Audit, Remuneration and Nomination Committee where more appropriate for them to respond. This is also encouraged under the Guidance on Board Effectiveness.
An Online Follow-Up Is Good Practice
Although there is no legal requirement, sharing responses given at the AGM on the Company’s website shows transparency, will demonstrate that each individual member’s voice has been heard, and will encourage greater member engagement in future. An email address could be included so that any follow up questions could be submitted to the company by shareholders after the meeting.
Preparation Is Everything
The Company Secretary may choose to include the questions and answers in the minutes of the AGM and, in any case, keeping a record of these will be useful when preparing for the next year’s meeting.
With thought and planning by the Company Secretary, dealing with shareholder questions at the AGM can be managed effectively with shareholders feeling they have been heard and a fair process has been followed.
Anne-Marie Clarke, Director - Head of Governance at EQ Proxy Solicitation commented: “Knowing what is on the minds of your shareholders is key to being well prepared for the AGM, and prepared Q&As is a useful tool in facilitating and enabling effective dialogue on these matters. It’s also important to recognise there may be different priorities and questions depending on the type of shareholder such as institutional investors and individual shareholders, some which may be employees. How you engage with these different shareholders outside of the AGM could determine the potential questions at the AGM.”
Lisa Graham, Head of Meeting Management at Equiniti added: “The AGM is seen by individual shareholders as their one opportunity to directly address the Board. Engagement with this audience is key and can be enhanced through Board members also proactively mingling in a more informal setting before and after the meeting.”