Around this time every year, our Responsible Investment team starts getting ready for the busy equity proxy voting season. Around 60% of all annual general meetings (AGM’s) we analyse and vote at occur in the three-month period of April-June. Engaging with these companies ahead of deciding how to vote is resource-intensive.
And of course, this year appeared no different at first. In the UK, many companies are seeking shareholder re-approval for their remuneration policy (required every three years under UK law with the majority falling in the same year). As such, the team had been busy with in-depth engagements on the structure of remuneration at multiple companies. But clearly things have changed radically and quickly for all of us.
As we all know, travel restriction and limits on mass gatherings mean that organising any sort of meeting has become challenging. Not least one that often requires a company’s representatives, shareholders and other stakeholders to be physically present. In many countries, company law and corporates themselves are simply not set up to hold virtual AGM’s. However, these meetings must go ahead; there are resolutions that need to be passed to enable companies to function. This includes, for example, the appointment of a new CEO (as is the case with our parent company, AEGON), the payment of dividends (if appropriate/allowed and under normal circumstances which investors expect) and the setting of remuneration policy.
AGMs have historically also provided a public forum for investors and other stakeholders, who may not necessarily have the opportunity otherwise, to voice their opinions (and have a biscuit or two). As a large institutional shareholder, access to companies isn’t generally a concern for Kames, but it is for small retail shareholders who deserve the right to be heard. Companies are a part of our society, so many NGOs also use AGMs as a platform to raise awareness of a company’s activities in the context of important issues like climate change or diversity. For these reasons, the idea of virtual AGMs has therefore mostly been frowned upon. Until now.
Whilst there have been a few postponements, governments and their lawmakers have moved rapidly to address these extraordinary circumstances. For instance, in France and Italy, there have been emergency decrees passed to allow for virtual meetings. Switzerland is allowing “closed door” meetings to take place, whilst Australia is allowing an extension of the permitted time between a company’s year-end and its AGM. In the UK, we are currently waiting to see what the government decides.
So these are strange times. We are all having to rise to a multitude of challenges in the face of Covid-19. Dealing with the peculiarities of having to hold an AGM is obviously somewhat down the priority list behind keeping staff safe and protecting the wellbeing of the most vulnerable members of our society. However, society also needs business to continue to function to prevent things getting worse.
About the author
Miranda is a member of Aegon Asset Management’s Responsible investment Team, where she is responsible for ESG integration, voting and engagement. Her role involves overseeing the environmental, social and governance screening process for ethical and sustainable funds. She also provides corporate governance screening and research for all equity investments across the group and conducts research into wider ESG issues. Miranda is responsible for the monitoring and engagement of the ESG approaches and performance of investee companies in line with our responsible investment policies. She leads engagement activities with public policy makers and investee companies on issues such as board structure, remuneration, environmental impact and social practice. Miranda joined in 1994 as a research assistant in the UK equity team and has 26 years’ industry experience. She studied Chemistry at Napier University in Edinburgh and has the IMC professional qualification.
*As at 30 April 2020.