Analysis: Almost forever? Transition to online AGMs accelerates despite concerns


  • Forty percent of European virtual AGMs so far in 2021
  • Seventy FTSE 350 companies sought to change AGM rules
  • IAG and Deutsche Wohnen among those to face AGM mini-rebellion

LONDON, Aug. 9 (Reuters) – A massive shift by businesses in Europe to holding annual or virtual general meetings has accelerated this year, raising investor concerns that some companies will try to abandon the business for good. physical version.

The pandemic has brought about an overhaul of how businesses meet investors, with those in Britain relying on emergency laws to allow them to hold AGMs online during the 2020 season.

But in the second year of the pandemic, some fear that permanent virtual meetings will limit investors’ ability to hold executives to account.

From January to July, 40% of AGMs worldwide were fully virtual, compared to 27% for all of 2020, according to data from Computershare.

In continental Europe, the jump was particularly strong, with 753 of 878 going fully virtual in the first seven months of 2021, up from 548 of 918 in 2020. The United States has not seen the same change – about half of meetings from 2021 through July was virtual, a similar proportion to all of 2020.

Several companies, including British Airways owner International Airlines Group, have applied for permission this year to go fully virtual in the future and have mostly faced shareholder rebellions of between 10% and 20%, although all of these motions were carried.

While many companies have allowed a live chat with management in virtual meetings, others have shielded bosses from tough questions, said Kalina Lazarova, director and analyst for the responsible investment team at BMO Global Management. of assets.

Tactics included requiring questions to be submitted in advance, selecting answers, stopping follow-up questions, and limiting time for questions.

“We recently heard from companies in Germany that the lack of live Q&A removes some degree of scrutiny and pressure from directors at the AGM,” Lazarova said. “We fear that if these practices become widespread (…) shareholder democracy, in particular the access of private investors to boards of directors, will be eroded.”

In Great Britain, data from Thomson Reuters Practical Law “What’s Market” showed that, so far in 2021, 85 FTSE 350 companies had proposed to change the rules in their articles of association regarding the format of shareholders’ meetings by 2021, compared to 41 in 2020.

Of these, three sought to enable fully virtual meetings: IAG, Sanne Group (SNNS.L), an asset management service provider, and Diversified Energy Co (DEC) (DEC.L).


At its AGM in June, the AGM’s resolution to allow virtual meetings as long as there are reasons that make it desirable was passed with 81% of the vote.

The ISS advisory group opposed the change, saying while virtual meetings are justified in today’s environment, they feared the company would commit to reverting to physical or hybrid meetings when it becomes possible again.

Britain’s Aviva Investors, one of IAG’s top 60 investors according to Refinitiv data, said it voted against the motion. “As a matter of principle, we do not support virtual-only AGMs,” said a spokesperson for Aviva.

IAG made no comment beyond confirming the results of the vote.

Sanne saw a 15% rebellion against his resolution in May to allow directors to choose a fully virtual AGM in the future, although consulting firm Glass Lewis recommended voting against the proposal because there was no enough disclosure about the circumstances under which a virtual meeting might be held or how shareholder participation rights would be protected.

Sanne “remains committed to holding physical AGMs for the foreseeable future,” a spokesperson said.

Glass Lewis said he also opposed attempts to allow virtual meetings only at Deutsche Wohnen (DWNG.DE) and the Moscow Stock Exchange (MOEX.MM).

But DEC’s change in its articles to allow virtual meetings only was adopted by 99% of the vote. ISS said it supports DEC’s change because the company has said it has no plans to hold fully virtual AGMs except under extenuating circumstances.

An association of employee shareholders at the AGM of Siemens (SIEGn.DE) presented a resolution to allow shareholders to ask questions during virtual meetings (rather than in advance), but the board of directors of the company recommended not to do so.

With 56% of the vote, the resolution did not reach the threshold of 75% required to pass.

Diana Lee, director of corporate governance and engagement at AllianceBernstein (AB), said the asset manager’s position depended on how shareholders can ask questions.

“We’re not necessarily against (virtual meetings only),” said Lee, “as long as companies continue to allow shareholders to ask all questions and answer all questions in a way that truly mimics meetings. in person, as rather than having framed or prepared responses.

Reporting by Elizabeth Howcroft and Simon Jessop Editing by David Holmes

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