The value of AGMs 8 comments
(P.S: Sorry for any disturbances the advertisements above may have caused you)
It is that time of the year again where the management of listed companies come face-to-face with minority investors. Today's Business Times had an article by R. Sivanithy today ("Are AGMs a necessary charade?") which put a question mark on the value of AGMs.
How many of you actually go to the AGMs of companies that you invest in? And if you do, is it for the food (where the food spread, I heard, is getting less lavish every year... is that indicative of the trend in which minority investors are being viewed?) or do you genuinely go there to try and get good insights from management first-hand.... what they call scuttlebutt?
I have to admit that I have never been to a single AGM in my life. For various reasons, the main one being that I have to earn a living elsewhere, but also because the inconvenience of actually having to take time off to attend these AGMs outweighs the value of getting to watch company management field questions from minority investors. From the "scuttlebutt" (or feedback) on the AGMs that some friends have attended, they are merely half- or one-hour events where management goes over each resolution and ticks them off without much protest from the audience; questions are usually curtly dealt with. The audience, by the way, are more like spectators (an audience listens and asks questions to learn things, spectators hope to catch action such as quarrels or management being caught in a tight spot).
Hence it is that AGMs are typically mundane affairs, sometimes interesting to watch or even dramatic (during Natsteel AGMs with Oei Hong Leong in attendance, or heated exchanges between JY Pillay and a veteran investor some years back at an SGX or SIA AGM, I think), but seldom justifying the minority investor's decision to attend to try and understand more of the company from the horses' mouths. Wish there was a Warren Buffett in Singapore whose words of wisdom alone were enough reason to buy a share in the company just to get a ticket to the AGM.
Seriously, there could be so many ways to enhance the value of an AGM, given the advances in technology (and the general tech-savviness of investors) nowadays. Firstly, prior to the AGM the company could invite questions from investors in online forums, and then proceed to answer them during the AGM. There are quite a number of companies already fielding questions on Shareinvestor.com, but none of them have actually integrated them with their AGM. It would be so valuable to small investors to hear management address their doubts on the company face-to-face ..... that's the point to AGMs isn't it? Secondly, these companies might as well cut the cost of sending to investors thick circulars on "Proposed Amendments to Articles of Association" blah blah blah that nobody really reads, and instead put it online (after all, investors should be rich enough to own an Internet line, and can get their children to help them load the documents); they can use this money to send investors a copy of the AGM proceedings instead (including questions asked and answered); I do think that will be much more valuable to shareholders. Thirdly, a non technology-related suggestion: can they please hold the AGMs in the evening where more minority shareholders working during the daytime can make it?
Somehow, I don't think the last suggestion is going to work, given the people dynamics involved as suggested by R. Sivanithy. The group that the company management want to cater to are the substantial shareholders such as the fund managers, and these guys are not going to work overtime by attending AGMs in the evening (and perhaps, neither is the management ready to do so). On the contrary, if the company management are eager to minimise contact with minority shareholders as well as embarrassing/difficult questions from them, then I think they have optimised things with the way that things are now with AGMs.