Financial Times

Bottom lines, not waistlines
There appears to be a small group of retail shareholders who seem to be hopping from AGM to AGM, driven not by a desire to learn about the performance of the listed firms in which they have invested money, and to talk to the people who manage them, but rather the free food, drinks and gifts available at such events.

As our story reveals, such shareholder gatherings are in danger of becoming a farce with some shareholders noted for their tendency to rush for the food and gorge themselves before the meetings are over.

The corporate reporting season is just over, with a host of AGMs being held in recent weeks at which this bad behaviour was very much evident. In fact it has become a talking point of sorts in the corporate world.

The rush for food, with tales of elderly gents stuffing short eats into bags may seem amusing, along with the nitpicking over the calibre of catering at such meetings. Furthermore, those observers with a sense of humour might look upon this lack of manners among a certain group of shareholders as evidence that share ownership has become more egalitarian and no longer confined to a rich, sophisticated elite, and that we are well on our way to becoming a share owning democracy.

But if the phenomenon of such coarse behaviour has become so prevalent as to cause comment and concern in the boardrooms, not to mention disgust, then it deserves some attention.

For, we can’t afford to have AGMs being turned into a farce especially in an era where corporate scandals involving some of the icons of free market capitalism are still fresh in our minds.

These meetings are perhaps the only places where shareholders have an opportunity to meet the people who run the companies in which they have put in money and to ask probing questions about the management performance, or lack of it. Keen shareholder interest is required to keep managements on their toes.

The managements of listed companies are reluctant to openly condemn such behaviour since the culprits are their own shareholders and they are yet to make a fuss at the AGMs themselves given the embarrassing nature of the problem.

However, this is only one side of the story. The other side is that certain managements themselves make the AGMs a disappointing affair by ‘fixing’ the discussion or shouting down shareholders who ask embarrassing questions.
With certain shareholders more focused on food and freebies, there is growing concern that companies which do not like too much scrutiny of their books or performance could exploit the practice. It could be easy for such firms to ‘buy over’ shareholders by turning a blind eye on or even encouraging such behaviour.

On the one hand we have investors complaining that some of the firms in which they have invested money are not transparent enough and that company directors dodge questions at AGMs or give evasive answers or worse, do not allow questions to be asked. On the other hand we have the situation where some investors seem not to care about company performance but attend these meetings more for the free food, drinks and gifts on offer.
Both shareholders and managements seem to need to re-assess their attitudes.

The gentlemen running our companies must understand they are directors, not dictators, and they cannot bully minority shareholders.
And those small shareholders more concerned about the food and freebies than the Profit and Loss account must be told that what is important is not expanding their waistlines but rather improving the bottom lines of companies in which they, and other members of the public, have invested good money.

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