TRACEY DAVIES: AGMs should also be free and fair

As awareness grows about the devastating impacts that many multinational corporations have on people and the environment, AGMs are becoming key sites of contestation.

Shareholder activists attend AGMs to publicly engage boards of directors on climate and other ESG issues. Those who do not hold shares use the annual events as an opportunity to protest against harmful activities and to demand change.

For global fossil fuel companies and the institutions that finance them, it is becoming more and more challenging to hold a quick and quiet AGM. On May 24, for example, hundreds protested in Paris outside the AGMs of oil major TotalEnergies and Amundi, Europe’s largest asset manager. Police arrested 175 protesters — the reasons for the arrests are hard to ascertain.

South African corporates have been sheltered from this kind of disruption. The only company that has had to deal with protesters inside the confines of its AGM is Sasol. In November 2023, about 10 Extinction Rebellion activists interrupted the CEO’s address to sing protest songs and give testimonies about the company’s climate impacts. In response, the board cancelled the meeting.

Since then, the boards of several JSE-listed companies are running scared. Sasol and others are now holding “electronic-only” AGMs, after hosting “hybrid” AGMs in 2023 that shareholders could attend either in person or online.

In an electronic-only AGM, shareholders engage through the awkward, sterile medium of an online platform. Who speaks, when and for how long is carefully controlled by the company. Questioning can be shut down in a way that is hard to do when you’re in the same room and, of course, protesting is not possible.

But it’s not just protests that cause corporate AGM alarm. Just Share has attended more than 80 AGMs in the past five years, and boards do not like to be publicly questioned about operations, strategy or impacts. All manner of tactics are deployed to deter us from asking questions at AGMs, the most common being an invitation to “engage” a week or two before the meeting.

These engagements are useful and appreciated, but there is often an implicit expectation that they will preclude AGM participation. This expectation is misguided: the AGM is a different and extremely important platform for holding companies publicly accountable, one which is unfortunately not utilised by big institutional shareholders that could really make a difference.

Corporates’ deep aversion to public engagement at the AGM is perplexing in the context of our regulatory regime. The Companies Act specifically provides that the business to be transacted at an AGM must include “any matters raised by shareholders, with or without advance notice to the company”.

The King code places stakeholder engagement and shareholder activism at the centre of good corporate governance. Shareholder activism should be understood as a constructive effort by shareholders to influence corporate behaviour, both in their own interest and for the social good.

In this respect, it makes no difference how big or small the shareholder is. Questions from NGO shareholders play an important role in promoting good governance and accountability, and are almost always designed to serve, as the King code recognises, as “proxies for wider stakeholder interests” in relation to crucial issues such as climate change, air pollution and inequality.

Answering the tough questions

To be fair, no-one enjoys having to answer difficult questions in a public forum, and managing protests is awkward and fraught with PR tripwires. But directors of JSE-listed companies are held up as titans of the corporate sector, with decades of experience in handling tough situations. They are also extremely well paid. You’d think it would take a little more than a handful of singing Extinction Rebellion protesters to freak them out.

Perhaps the real reason for much of the corporate fear around AGMs is that managing difficult questions or noisy protests has the potential to make important people look a little silly, a little unprepared, and a little less dignified than how they like to come across.  And of course, the more important you are, the less you think that anyone has the right to hold you accountable at all; that much South Africans know all too well.

But here’s a message for corporate boards and their PR officers: resisting accountability, being rude and arrogant to shareholder activists exercising their rights, and hiding from protests will only have one effect — to ramp up scrutiny of and opposition to the company you lead. So do some proper prep, put on your big-boy/girl pants and confront the challenge head-on.

* Davies is executive director of Just Share