Ways to make your shareholder vote really count
WHILE shareholders own a company, it’s the executive team and board who hold the day-to-day power. They decide what dividends to pay, what strategy to follow and how to shape the company’s ethos. But for a brief window every year, shareholders are given the tools to gain control. Over the next few weeks, most UK-listed companies will be holding their annual general meetings and an annual vote. Here, every shareholder from the biggest pension fund to the smallest individual investor has a right to have their voice heard.
AGMs are open to all investors and even if you have just one single share, you are entitled to vote. Anyone can stand up and ask a question of the board or the chief executive. It’s a right well worth using to help shape the companies you are relying on to grow your long-term wealth.
IT’S NEVER BEEN EASIER... YOU CAN ATTEND FROM HOME
YOU no longer need to travel to attend an AGM – you can do it all from the comfort of your own home. Until last year, most were held in person, so shareholders who wanted to attend would have to travel to where the company was based.
However, when the pandemic hit, companies were forced to move their AGMs online. Unsurprisingly, attendance has risen significantly and most companies are considering a hybrid model for the future.
Of course, it’s more convenient attending an AGM remotely. But if you ever do get the chance, and once such gatherings are permitted again, nothing beats attending one in person.
Michael Kind is campaigns manager of shareholder organisation ShareAction. He says: ‘It is great that AGMs are being held virtually so people can attend who wouldn’t be able to travel to them. But they can feel quite staged online. Questions are often submitted in advance so you can’t observe the immediate reaction to them.’
If you attend in person you also often have the opportunity to speak to members of the board and executive team in person.
WHAT IMPACT COULD YOUR VOICE HAVE?
YOUR vote and participation could help influence executive pay, a company’s climate change policy, whether directors are reappointed and what strategy it follows.
For example, the board of estate agent Foxtons promised to review future pay packages following a shareholder revolt at the company’s AGM last month. Almost 40 per cent of shareholders voted against the annual pay report, which included a near £1 million bonus for the firm’s chief executive. Meanwhile, Tesco committed to make its ready-meals healthier and increase plant-based options for shoppers in March, following a shareholder resolution led by ShareAction.
On Wednesday, Barclays’ shareholders can have their say on whether the bank should phase out lending to the fossil fuel sector. Unilever, Aviva and Rightmove are also holding their AGMs this week with AstraZeneca, Centrica, BP,
Rentokil, Balfour Beatty, Hiscox and Prudential following suit the week after.
The annual vote always involves a vote on directors’ remuneration and the reappointment of directors to the board. The executive team may also include other resolutions they want shareholders’ views on.
Shareholders also have the right to add resolutions if they wish. In order to do so, they need five per cent of the share capital or 1,000 people with at l east one share each and with a total value of at least £10,000.
Shareholder groups such as ShareAction sometimes co- ordinate shareholders on a particular issue to have a resolution added.
HOW DO YOU FIND OUT ABOUT VOTES AND AGMS?
IF YOU hold shares with a company directly, they should contact you with details about the AGM.
If you hold them through an online wealth platform such as Hargreaves Lansdown, AJ Bell or Interactive Investor, the process can be more complicated. You will need to tell them if you want to vote or attend an AGM – some platforms will not let you know you have the right to vote. Another option is to sign up for a new service called Investor Meet Company. This is a platform that aims to give individual investors the same access to a company’s board and executives as that enjoyed by institutional investors such as pension funds and investment managers. You can sign up for free and tick which companies you would like to receive information on. In some cases you will be able to watch presentations and AGMs through the platform in real time, or as a recording later on.
Chief executive Marc Downes says: ‘ All i nvestors should be treated equally.’
...AND HOW DO YOU KEEP UP ON THE BIG ISSUES?
THE best way to keep on top of the companies you are a shareholder in is to watch the news and read the newspapers.
Look out for any controversies that the company may be mired in. Large investors have services they use to tell them what the big issues are – these also offer recommendations on which way to vote.
For ordinary investors there is less targeted information available.
Individual shareholder group ShareSoc is launching a service for members that offers insights into the key issues and votes coming up.
It is also hosting a free online webinar this Wednesday called ‘How to vote in AGMs and how to make your vote count ’( go to website Sharesoc. org for more information).
Meanwhile, ShareAction keeps a list on its website of key AGM resolutions that are coming up.
Shareholders are often given a long list of issues to vote on before an AGM.
ShareAction’s Michael Kind recommends looking out for resolutions that have been added by shareholders. These often cover areas of contention that shareholders feel the board needs to do more work on.
COULD YOU HOLD SHARES JUST SO YOU CAN VOTE?
I N GENERAL, shareholders choose to invest in a company because they see its potential to grow their wealth and perhaps to pay an income. But some shareholders invest in a company so they can influence its strategy – even if they don’t like the company in question.
Follow This is an organisation that encourages people who want to help tackle climate change to buy just one share in Shell and one in BP so they have the right to vote on their fossil fuel reduction policies.
Dutch campaigner Mark van Baal set up the organisation when he realised the oil companies may not listen to the media, or campaigners on climate change, but they are obliged to listen to shareholders.
He decided to change them from within. ‘ Only shareholders can make oil companies change course,’ he says. ‘They won’t do it on their own initiative. And the AGM is the moment when the board listens to its shareholders.’
Follow This and its supporters have filed resolutions for the forthcoming AGMs at BP and Shell, on May 12 and 18 respectively.
WHAT ACTUALLY HAPPENS AT THE MEETINGS?
AN AGM typically lasts for one or two hours, with presentations from the chairman and chief executive on the year’s highlights, followed by a question and answer session.
Jonathan Lahraoui works in asset management but also attends company AGMs in his own time to ask questions about the issues that matter to him, such as climate change and social mobility.
He says: ‘They’re not as boring as you might think. I would recommend them to anyone with an interest in how a company works, and how they affect society.
‘There will be talk of profits, of course, but also on interesting issues such as changing supply chains or adapting to cope with the pandemic.’