Shareholders yet to grasp business of AGMs

The other day, a colleague rather cynically remarked that Annual General Meetings had lost their flavour and were not worth serious consideration any more as they had become more about food and give-aways for shareholders than serious engagement with company boards.

Annual reports

This is highly regrettable, considering the need for more active corporate governance.

But more worrying is that this observation is becoming true of many firms.

Take Safaricom’s AGM held at the Bomas of Kenya last week.

In spite of the company being in the midst of what some would term a “hostile” working environment, little regard was given to industry issues by the over 1,000 shareholders present.

The problems started at the door, where the grumpy owners complained that there were hardly enough annual reports to go round and that they should have been posted earlier.

This was in spite of a circular —that they themselves approved last year — that allowed Safaricom (and the shareholders of other companies like Access Kenya) to forward the report electronically to cut costs.

Once inside, one of the first complaints heard by the board was about lack of transport to Bomas.

There were also no T-shirts, pens or umbrellas.

The fact that the company’s eight billion shilling dividend must be divided amongst over 800,000 shareholders was also criticised, as the resulting Sh0.20 shareholders will receive for each share they own was not worth banking.

But the highlight of the event came when a shareholder told off the board in no uncertain terms, saying they had let the company down and were engaging in “bad” business. He was applauded as he exited the hall.

Granted, what happened at the Bomas last week was not indicative of all AGMs in the country, but it certainly raises pertinent questions about the events’ relevance and real value to business.

To establish whether AGMs are still worthy forums where real business issues are tackled, I looked outward, hoping to find evidence of a meeting where shareholders engaged their boards in critical discourse. What was discovered is that we are not peculiar in this habit.

At a British Airways AGM held during the height of the 2009 recession, the company’s board was taken to task over various issues, including food choices and strategic decisions.