Embracing the opportunities for shareholder engagement

AGM season has been in full flow and attending several of them has highlighted once again the value of shareholder engagement in 3 forms:

  1. As a shareholder, you get to ask questions directly to the management and board and hold their feet to the fire for answers in the room
  2. As a management and board, you get the opportunity to build trust and relationships with shareholders that can prove invaluable
  3. As a shareholder, you get to meet other shareholders and learn a huge amount from their perspectives and insights

While the growth in live streaming has opened up access to AGMs there’s still nothing better than attending in person, recognising the time and travel required. But in those small number of cases for your larger investments, the time really can be worth it. Questions posted in the streams don’t necessarily get answered and you don’t get to feel the mood in the room with such clarity. When you’re in the room, you can just keep raising your hand until you’re handed the mic. Yours truly can be heard sneaking through 8 quickfire questions at the recent Avacta AGM (from 23 mins in the video link below) and getting fantastically clear and honest responses from management.

With over 100 shareholders present and a large contingent of company management this was probably the best, most enjoyable and most professional AGM I have ever attended. The level of engagement and respect for shareholders shown by the board and team makes a mockery of the lacklustre efforts of their AIM peers.

Of course, boards find it easier to put on a good show when they’re delivering and there’s a supportive crowd in the room. The Avacta team are delivering in spades and patient investors can see the enormous value being built before their eyes. They are happy holders despite a share price that makes them want to cry.

Contrast this with the likely atmosphere at the upcoming Bidstack AGM where the board are, in my view, demonstrably failing (please simply see the share price for evidence), and I expect the atmosphere to be somewhat hostile. Shareholders will be demanding answers from a board that show a total disregard for them while trying to defend a track record that is indefensible. But this exactly highlights the importance of attending, particularly when they don’t even provide a live stream for shareholders.

This is the one time a year shareholders will get to hold the board to account as they refuse to engage at any other time. Shareholders also get to directly impact their future governance destiny with, in this case, both the chairman and previous chairman up for a vote on their re-appointment. I have already voted against both and would encourage others to do the same. As a shareholder you’re an owner of the business, and owners of businesses don’t let underperforming employees hang around on the payroll indefinitely destroying value.

Bidstack obviously aren’t the only board that needs to improve its engagement of course. That list is quite long. On the other hand I have found that a number of boards are increasingly embracing the opportunity presented by AGMs.

It is easy when markets are as horrendous as they are right now to simply use that as the excuse for underperforming share prices. However, I believe that boards have a much greater opportunity to influence their valuations through improved investor communications and sentiment than many would believe. In many cases there are some very obvious ‘easy fixes’. They simply need the desire to do more than turn up to a few board meetings and collect their fees.

So, attend AGMs. Vote your shares. Influence the outcomes that you want to see. Engage with companies in the way that you want them to engage with you – proactively. You’ll meet some fantastic other investors and learn a lot more about the businesses you own.