JENNY RUTH: Fostering creativity, ASMs and dumb use of technology

Creative HQ had a great idea to foster innovation and the democratic process by hosting a forum to provide a platform for political parties to communicate relevant policies directly to all the capital's tech-heads, nerds and venture capitalists.

But then somebody at Creative HQ, which is owned by the Wellington City Council and Greater Wellington Regional Council, had another great idea that was just dumb:

Let's gather about 150 people in a room together and then force them to channel all communication, including questions and observations, through an app to the MC, and heaven forbid they should just talk to each other.

Killed it, and not in a good way.

Instead of a lively interchange of ideas between the pollies and the 150 people who turned up, it became a dull hour of listening to the politicians.

It was a classic case of using technology for the sake of using technology with no thought as to how appropriate it was.

Honestly, we could just as well all have been watching on Zoom for all the genuine debate that wasn't generated.

Keeping it real

It served as an object lesson for why the New Zealand Shareholders' Association (NZSA) should continue to insist on listed companies holding in-person annual shareholders' meetings (ASMs), although NZSA also favours hybrid meetings, giving those not able to attend the opportunity to participate electronically.

In the June edition of The Scrip, NZSA's newsletter to members, it said: "While the virtual meeting process is working satisfactorily, we are making it clear to companies that once the covid-19 restrictions are lifted, we expect them to have a physical meeting as well as a virtual meeting.

"Restricting physical attendance at ASMs disenfranchises shareholders and severely limits questioning of the board and management," the newsletter said.

"If questions can only be asked online, rather than directly, there is the risk that the meaning can be lost or misinterpreted and there is no guarantee a question will be acknowledged and answered during the meeting."

And in its advice to members on how it would vote proxies at Pushpay's annual shareholders' meeting, NZSA noted that "virtual meetings have proved that they are no substitute for the real thing".

We learnt during lockdown that virtual company annual general meetings could work well at a time when in-person contact was forbidden, except for essentials when physical distancing was mandatory.

We learnt Zoom parties were better than nothing, but that was make do. Human beings crave social interaction, and Zoom was a poor cousin to the real thing.

Past form

NZSA has fine form on opposing virtual-only ASMs.

In 2016, when Spark chair Mark Verbiest told that year's annual shareholders' meeting the company was proposing to go virtual-only for the following year's meeting, NZSA declared war.

Then Spark chief executive Simon Mouter argued virtual-only meetings made "sense" because out of its more than 40,000 shareholders, only 66 had attended the 2016 meeting and that most analysts, media and shareholders had chosen the online option.

Former NZSA chair John Hawkins fired back that virtual-only meetings would mean "you can't eyeball people, you can't get a handle on body language".

Verbiest had talked about saving money which Hawkins declared was "a ridiculous red herring for a company of the size of Spark".

Spark duly backed down and continued to hold hybrid meetings, allowing shareholders to choose how they attended.

Z Energy made similar arguments in planning a virtual-only ASM in 2017, and even attempted to belittle and discredit NZSA's opposition by calling its survey of members – which found only 2 percent favoured virtual-only ASMs – unrepresentative because it had "only" 350 participants and that only 8.9 percent of them, or 31 people, had participated virtually in a meeting.

Fortunately, Z quickly saw the error of its ways and that attacking a group dedicated to protecting retail shareholders' interests wasn't a good look.

Not just local 

Virtual-only meetings isn't just a New Zealand issue.

Now retired Australian Securities and Investment Commission commissioner John Price said in May that annual shareholders' meetings are "a very important part of the corporate calendar and an aspect of Australia's corporate environment that is often underestimated."

For most analysts and governance experts, they are much more than a legal requirement.

"For at least once a year, directors get to be 'eyeballed by their owners' — the shareholders. And those same directors have the opportunity to seek the most powerful mandate of all: endorsement of the company’s strategy, its management, plans and performance — their performance," Price said.

In April, the Financial Times reported on how different the ASM of Australian oil and gas producer Santos was this year.

It noted that, with climate change activists staging noisy protests and green-minded investors throwing curly questions at directors, Santos ASMs "are usually combative, drawn out affairs."

But this year, when the coronavirus necessitated Santos holding a virtual-only meeting, "the event was finished in less than two hours, with far fewer heated words than usual."

While the Financial Times reported people trotting out the usual arguments about how expensive in-person meetings are, and even quoted a German lawyer talking about the need to "modernise" them, it also noted how limiting virtual-only meetings are, particularly for retail shareholders who, unlike institutional shareholders, don't have ready access to directors at any other time.