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21 June 2021

Just Share 2021 AGM Roundup 1: 21 May – 9 June

Just Share has attended seven virtual annual general meetings (AGMs) since 21 May 2021:

  • Old Mutual Limited: 21 May
  • Standard Bank Group Limited: 27 May
  • Exxaro Resources Limited: 27 May
  • Nedbank Group Limited: 28 May
  • JSE Limited: 3 June
  • Absa Group Limited: 4 June
  • Sanlam Limited: 9 June

At these AGMs, we have asked company directors and executives a total of 22 questions relating to inequality (wage gaps and income inequality) diversity and transformation, climate change, and related governance issues. We’ve made all of our questions, as well as the companies’ responses, available here.  At the end of this post, we also highlight some of the key commitments made in response to these questions.

Each of the AGMs we have attended in 2021 is the second virtual AGM for these companies. There have been some noticeable and encouraging improvements in the way these have been held, compared to 2020, but also some ongoing frustrations and barriers to effective engagement.

Some improvements

  • Most companies this year have been well prepared for shareholder questions (last year many seemed to be taken by surprise that any questions were asked at all). More time is being allocated for Q&A sessions, and more shareholders are asking questions.
  • At most AGMs this year, board members have been visible, on camera, when speaking and answering questions. Ideally, the board would all be visible on screen for the duration of the AGM.
  • At the AGMs of Nedbank and the JSE, guests were permitted not only to attend the AGM, but also to ask questions (although none did so).
  • The JSE provided an agenda for the AGM – the first time we’ve seen this in the 22 virtual AGMs we’ve attended since March 2020. As every company has a different order of events for its AGM, it makes a huge difference to participants to know, at the outset, what that order of events will be.
  • The virtual format does make AGMs more accessible.

Still room for improvement

  • At most AGMs, shareholders are only able to ask questions in written form. This is a cumbersome process, made worse by the fact that many platforms have undisclosed word limits, which result in questions being cut off and/or appearing in the wrong order on the screen.
  • Someone other than the person posing the question (usually the company secretary) then reads the question out to the board. As this person has never seen the question before, and may be unfamiliar even with the subject matter of the question, this inevitably means that questions are read out hesitantly, with incorrect emphasis, and sometimes incorrectly. This is hugely frustrating for the questioner, who sits helplessly listening to the mangling of his/her question. There is no technological barrier to verbal question and answer sessions (some companies allow this already), and all companies should allow verbal questions to be asked.
  • The written-only format also makes it extremely difficult to respond to a director’s answer to a question. As most responses are deliberately non-committal, the inability of the questioner to respond means that these interchanges are frustrating. This may be convenient for the board, but creates reputational issues, and reinforces the perception that AGM engagement is not worthwhile.
  • Some transfer secretaries and AGM platform service providers are leaving it until the last minute to provide shareholders who wish to participate at AGMs with the necessary letters of representation and/or log-in details. Often these are only received hours before the AGM starts, creating unnecessary administrative issues and anxiety, and in some cases making it difficult or impossible to participate in or vote at the AGM.

Key commitments made in response to Just Share questions

  • Khaya Gobodo, Managing Director Old Mutual Investment Group (OMIG): committed to providing a written response to Just Share’s question relating to the ESG approach of Capitalworks Private Equity. Old Mutual is invested in the Capitalworks fund which is the majority shareholder in Petmin. Petmin’s Tendele Coal mine in KZN has long been mired in social and environmental controversy. In 2020, environmental justice Fikile Ntshangase, who was opposed to the expansion of the mine, was gunned down in her home. See OMIG’s response here.
  • Trevor Manuel, Chairperson Old Mutual: Old Mutual “hopes to be able to publish the income differentials requested by Just Share (vertical wage gaps) in its next set of results”.
  • Ian Williamson, CEO Old Mutual: Old Mutual should be in a position to publish its first report in alignment with the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) “in the next cycle of shareholder reporting at the end of this year”.
  • Thulani Gcabashe, Chairperson, Standard Bank, in relation to the climate competence of the Standard Bank board: “We recognise that we need to add more skills, who are competent in the general area of ESG, and we will be doing so in due course.”
  • Mzila Mthenjane, Exxaro executive head of stakeholder affairs: Exxaro will publish interim targets and plans to achieve net zero carbon emissions by 2050, in its next integrated report in early 2022.
  • Jason Quinn, interim group CEO Absa, in relation to the financing of Karpowerships: “Firstly, I can confirm we have committed to nothing yet. Any commitment remains subject to independent legal, technical, environmental, insurance due diligences, as well as credit processes…We are not about to give away our reputation that we have built on one transaction…So we also recognise that aspects of one of these items, the Karpower, in particular, are subject to a court process – we would also not do anything or commit to anything until all of those processes are completed.”

AGMs are the only opportunity for shareholders to pose questions to corporate boards in a public forum, and often the only opportunity that smaller shareholders have to engage “face to face” with directors.

Since the start of the Covid-19 lockdowns in early 2020, almost all JSE-listed companies have held electronic or virtual-only AGMs. In May 2020, Just Share produced a guide setting out best practices for South African electronic-only AGMs, to help ensure that meetings comply with the law, and enhance, rather than inhibit, shareholder participation.

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