The following sample questions are based on more than 200 questions that we have seen asked at client AGMs to date this year. The evergreen focus on remuneration and dividends remains, as of course does the emphasis on ESG priorities such as boardroom diversity and tackling climate change. However, macroeconomic issues are also very much on investors’ minds, with questions prompted by Brexit, the pandemic crisis and the invasion of Ukraine.
1. ESG (Environmental, Societal and Government)
- What are your Net Zero ambitions?
This is a common line of questioning. However we’ve also seen boards being pressed for more than broad-brush aspirations – investors increasingly seek clear strategic evidence of the company’s commitment to be Net Zero by 2030. - What is your gender pay gap?
This remains a prevalent line of questioning, as boards are pressed on the measures they are taking to reduce the deficit. - What is your ethnic pay gap? And what is your reporting process for this?
Understandably, this and other diversity-related questions continue to feature prominently, and one that is being encouraged by the campaign group ShareAction. - What are you doing to level up?
Organisations are being asked to explain what they are doing to support the Government’s levelling up agenda. - Why has the Chair been in place for so long?
We’ve seen the tenure of Chairs challenged when it has exceeded nine years, with boards asked questions about replacements. - Why are you financing or working with Company X?
Boards are increasingly being challenged about connections to other firms linked to areas such as deforestation, oil and gas exploration, and arms sales.
2. Remuneration and Dividends
- How can you justify that bonus package?
This has of course been a contentious issue for many years, but it has now been brought even more sharply into focus by the cost-of-living crisis. - Why have my dividends not returned to pre-COVID-19 levels?
As the world emerges from the pandemic crisis, there is an expectation among some of a return to pre-2020 yields. - Why did you buy back shares?
If you’ve opted for share buybacks, your board should anticipate questions about the rationale.
3. Meeting Logistics
- Why here? And why now?
Perhaps it’s because many of us have been unaccustomed to attending large public meetings in recent times, but we’ve noticed quite a few questions around the timing of meetings (e.g. ‘too early’) and the location (e.g. ‘inconvenient’ or even ‘hard to find’). It’s probably therefore a good idea to provide as much information to attendees as possible, and consider all options to encourage attendance.
4 Macro-economic Events
- What impact is Brexit having?
Brexit may have been upstaged in the media by the pandemic crisis, and then the Russian invasion of Ukraine, but investors remain keen to understand the impact it is having on both practical operations and development strategy. For instance, is it limiting your plans for European expansion?
- Is COVID-19 still an issue?
Boards have been asked about the impact on premises – for instance, are hospitality groups seeing a return to pre-2020 customer numbers? Meanwhile others are keen to understand the impact that the pandemic-prompted shift to homeworking has had on staffing arrangements and office capacity. - How is the invasion of Ukraine affecting business?
Questions are being asked, in particular, about the impact on climate change targets and energy financing.
So… lots to consider – as well as some of the more leftfield questions that can crop up. But if there is one overall learning from our clients’ AGMS so far this year, it is that boards should brace themselves for enhanced scrutiny. After two years of operational challenges around COVID-19, investors are pressing for explanations of decisions made, the rationale employed and the strategy going forward.