The main 2015 AGM season finally concluded yesterday when the two Melbourne-based banks of the big four, ANZ and NAB, gathered with about 500 shareholders each in Adelaide and Perth respectively.
And the results were very different as NAB’s three resolutions all passed with more than 96% in favour, while ANZ ran into trouble, copping its biggest ever remuneration report protest vote and a double-digit rebuff of the board on a shareholder democracy issue.
After taking the Commonwealth Bank to the Federal Court on the question of shareholders being able to express opinions through an ordinary resolution, the Australian Centre for Corporate Responsibility tried a different tactic with ANZ this year when it proposed a constitutional amendment that would achieve the same outcome.
The ANZ board opposed it, as you can see from page 15 of the notice of meeting, with its key argument being:
“As the power to manage the Company’s business is vested in the Directors, it is important that they be able to exercise this power as they see fit and be solely accountable for doing so. It would lead to confusion, and impede the ability of the directors to oversee and manage the Company’s business in the interests of the Company as a whole, if the constitution gave shareholders the power to express an opinion, by formal resolution, as to how the power to manage the business ought to be exercised by the directors.
“Shareholders have a legitimate interest in the decisions made by the Board, but if shareholders could interfere in the management of the business by the Board, even by expressing non-binding opinions through formal resolutions, it would lead to shared accountability for decisions, and, consequently, poor administration and governance. If shareholders disapprove of actions by the Directors, they can refuse to re-elect them or remove them from office by ordinary resolution.”
Are they serious? The US has had thousands of non-binding resolutions put up by individual shareholders over the past 40 years, and no one in the land of the free would subscribe to that bizarre analysis from chairman David Gonski and his fellow ANZ directors.
Have they not heard of the non-binding vote on remuneration reports that happen at every Australian listed company AGM where shareholders get to express an opinion on all matters remuneration?
Interestingly, institutional proxy adviser CGI Glass Lewis came out in favour of the ACCR resolution, and this helped deliver an impressive 10.5% vote in favour, worth almost $4 billion.
There have now been 37 successful attempts to gather 100 of the necessary signatures from small shareholders for an AGM action, but very few of these proposing a specific resolution have ever made it to double figures.
Surprisingly, the Australian Shareholders’ Association (ASA) voted against a proposal that would give more voice to retail investors.
The ASA was one of the early pioneers of gathering 100 signatures for shareholder actions — especially the S249P 1000-word statement with no specific resolution — but hasn’t been down this path for more than a decade.
The ANZ protests did make it into this list ranking the 34 biggest protest votes over the main AGM season.
The Westpac and ANZ remuneration protests of 16.5% and 15.8% respectively were significant because no big four Australian bank has ever had a strike. The protests would have been higher but for the ASA, which voted in favour of both remuneration reports on behalf of more than 2000 shareholders who provided proxies.
Director protests were more modest than previous years but Bradken showed that board members can quickly bounce back after being rejected.
Eileen Doyle and Peter Richards were both turfed from the Bradken board after years of problems, but Eileen Doyle was yesterday added to the Oilsearch board and Peter Richards scored a gig on the GrainCorp board within a week of his Bradken ejection.
It just goes to show, it’s much harder to get out of the director’s club than it is to get in, although if you believe ANZ, shareholders should not be able to express a formal opinion about the performance of a board on a particular issue.
As for voting against directors, the average vote in favour is still about 96% and I can’t recall any ANZ director ever getting less than 90% in favour. If only political elections were this easy.
If anything, boards are becoming less tolerant of retail shareholders. The AICD this week signalled another assault on the AGM, which is the only day of the year dedicated to small investors.
A sense of powerlessness has resulted in retail voter turnout rates falling from about 8% to 5% over the past five years. Why bother voting when the big institutional block votes will dominate the outcome?
Despite making repeated requests, no company has yet agreed to provide an insight into retail voting sentiment by releasing their AGM results as measured by both shares and shareholders.
Seek and Ten were two examples from the past month that were politely requested to do this at their AGM but refused, even though share registry companies Link and Computershare have the figures and can provide them for no extra cost.
Perhaps this is another one for Malcolm Turnbull to turn his mind to at some point.
If you believe in open data, why hide the figures that reveal the voting sentiment of small shareholders to those very same small shareholders?
If only those council ratepayers could access some of this corporate democracy, eh, Mr Mayne?