The risks of AGMs held behind closed doors

Two thirds of FTSE 100 constituents have conducted their annual general meetings behind closed doors since the outbreak of the Covid-19, sparking concerns about shareholder rights.

Responsible investment campaign group ShareAction has written to FTSE 100 chairs urging them to carry out a virtual AGM this year, allowing for real-time questioning followed by voting to be replicated online, and ensuring that all types of shareholders can attend the meeting.

In his letter, ShareAction’s director of corporate engagement, Simon Rawson, said it was not a moment for boards to hide away.

“The Covid-19 crisis has seen the value of pension assets and shareholdings fall sharply,” he said. “Management teams are making vitally important decisions that will affect the long-term success of companies, as well as the lives of their workers and customers.”

The group is also calling for physical meetings to return to being part of the proceedings, whenever it is safe to do so again, using hybrid AGMs, which also have a virtual element.

Groups including Admiral, British American Tobacco and HSBC held AGMs behind closed doors, while companies including Taylor Wimpey and Unilever held hybrid AGMs.

AGMs held behind closed doors, with a minimum of participants not only exclude shareholders, they are likely to see women disproportionately sidelined from the process since a very limited number of FTSE chairs and chief executives are female, the letter said.

Peter Parry, policy director at the UK Shareholder Association, said: “Companies that have regular engagement meetings with shareholders, and this includes many highly-regarded businesses, will receive a sympathetic response to whatever decisions they make. Companies that have failed to establish trust and give the impression of being evasive with their shareholders will struggle. Closed AGM meetings and other actions which limit the flow of information to investors will be viewed with great suspicion.”