Z first with virtual-only AGM
Change after dismal 2016 turnout
ZEnergy has confirmed it will be the first listed New Zealand company to hold a virtual-only annual general meeting this year. The decision comes in the wake of its poor physical AGM turn-out in 2016. Just 19 people turned up for the meeting which was held in Wellington at Te Papa.
The company had expected a strong turnout at the meeting after having just completed the buy-out of Caltex’s New Zealand assets — a move which significantly increased the size and value of Z.
But instead of its sausage rolls and lamingtons being gobbled up by eager shareholders there were so many left over they went to the late night crew who unpacked the venue.
Stock Takes understands the only question at the meeting concerned how great the pies at Z are — not exactly a challenging query for the board of directors.
No date has been announced for the virtual meeting but it is likely to be held in June, earlier than its physical meeting which was in July last year.
Shareholders will be able to view the meeting over the internet and dial in and vote via a touchtone landline.
The move is bound to upset some shareholders.
Last year a survey of 350 members of the New Zealand Shareholders Association firmly rejected the idea of virtual-only meetings.
Just 1.71 per cent said it would be their preferred option with most (94.3 per cent) wanting to have a combined physical and virtual annual meeting.
Nearly 64 per cent of those questioned said the ability to eyeball the chair and directors of a company was very important to them.
Debra Blackett, Z’s corporate governance officer, said rather than reducing AGM attendance it was hoping to leverage off technology to increase the number of shareholders participating.
As well as the virtual meeting it will hold an extensive retail roadshow this month and has set up an email address (governance@z.co.nz) for investors to get in contact with the board at any time.
Blackett said the company understood there were times when shareholders wanted to meet with directors in person, particularly if something controversial was happening, but it believed its shareholder relations programme was comprehensive enough to cover that.
Z Energy is not the only one eyeing the virtual option. Spark NZ has held dual virtual and physical meetings for the last few years.
Gone is the 80s heyday of annual meetings when some companies served champagne and crayfish.
But it will be interesting to see if others follow in Z’s footsteps or if the sausage rolls roll on.
Drop outs of 2017
Stock market operator the NZX could be on the verge of being dropped from the benchmark NZX/S&P 50 Index.
The quarterly rebalance of the indices is due be announced next Friday with changes set to come into force on March 17.
As at market close on February 28, the NZX had the second lowest market capitalisation at $295.1 million of all companies in the NZX 50, with only Metro Performance Glass having a lower market cap of $265.1m.
Market capitalisation isn’t the only factor which is used to determine who is in the index. How much of a company is free floated and the liquidity of a stock are also taken into account, making it hard to predict who will come out.
Markets sources suggest The Warehouse could be the front-runner to be dropped out of the index with Sanford moving in, while the NZX could be on the cusp possibly replaced by CBL. But it’s too close to call.
Another market source said there may be no change this time round but a shake-up could be on the cards for later this year.
Even if the NZX still makes the cut this time it may only be a matter of time before the market operator no longer makes the big league.
Being in the NZX 50 is a major positive for listed companies as it means investment funds which track the index have to invest in the company.
Foreign investors are also more likely to invest in NZX 50 companies.
They are also more likely to be covered by analysts which can generate retail investor interest too.
Dropping out of the index would be a blow for any company but it’s a bad look for the company which runs the exchange.
Crystal ball gazing
The NZX is looking at ways to encourage companies to give more guidance on whether they are on track to meet analyst forecasts.
In the past, shares in some companies have taken a dive when profit results have missed the predictions made by analysts despite the result being seen as a good one.
Joost van Amelsfort, NZX head of market supervision, said one of the areas it was reviewing this year was its guidance around consensus guidance. Not all companies issue result guidance but it is popular for those at the big end of the market.
He said companies may need to be more aware if their results are going to significantly deviate from the expectations of analysts.
More guidance would be good news for retail investors too, many of whom are not privileged to see analyst forecasts.