At AGMs, shareholders get face time with boards and management teams to review how well their companies are doing and to suggest what else can be done to improve the business. In short, for many retail investors, who, unlike institutional investors, do not benefit from meeting-on-request, this is when they get to assess management’s performance and decide whether their capital is being utilised wisely.
Yet, for some reason, AGMs seem to have turned into freebie-hunting opportunities for shareholders who appear more interested in the goodies trotted out in a bid to entice attendance. A buffet spread, a bento set or a goodie bag are not uncommon gestures, which are understandable. For some attendees, however, these perks seem to have become the main event as opposed to being a bonus.
This is by no means new, but we are still witnessing shareholders who seem to be more interested in the post-meeting buffet than in management’s answers. Seats empty out well before the proceedings conclude, while plates, outside, are loaded high. The old quip that “AGM” stands for “annual general makan” very much stands.
Corporate governance advocate and founder of the newly established GDInstitute (GDI), Mak Yuen Teen, highlighted this very issue on LinkedIn, noting that by the time the AGM was over, the buffet had been picked clean; some shareholders reportedly left early, with food packed in containers to take home.
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While we don’t begrudge shareholders from indulging in their fair share of perks — indeed, some may argue that it is their right as shareholders of these companies — they should remember that these perks are not free. They are funded by the company, which means they are paid, in part, by shareholders themselves. While the sums may not materially affect companies’ bottom line, every dollar spent on a lavish spread is a dollar not returned to shareholders as earnings. Cash flow, however modest, still matters.
More fundamentally, shareholders are not customers who have a transactional relationship with a company. Customers pay for a product or service in exchange for the value received. A wealth management customer, for example, can expect to enjoy some perks like free by-invitation-only concerts or cosy dinners over a starched tablecloth, but they are fully aware that’s coming out of the handsome management fees that their bankers cream from their AUMs.
A shareholder, by contrast, is a part-owner. Their stake in the company means they have a right and a duty to engage meaningfully with how that company is run.
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When shareholders behave like customers by focusing on the freebies, they end up leaving the serious questions to other shareholders, or worse, to no one. Their interests risk going unrepresented. In worst-case scenarios, boards and management teams face less scrutiny with less accountability and may end up making decisions that serve their own interests rather than those of shareholders at large. Worse, company management or boards might think they can get away from the scrutiny of their shareholders by just offering a sumptuous buffet spread.
On the bright side, we have also seen how some shareholders, when asking questions at the AGM, would use “we” instead of “you” — a subtle but meaningful appreciation of this whole concept of share ownership. Still, more can be done.
So here’s what shareholders should think about before the next AGM: would you rather enjoy better food on the day of or better dividends in the long run? The answer, we hope, should be obvious.
