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Daily Telegraph: Monday view: Peace reigns at agms as investors focus on lunch

By Christopher Hope
(Filed: 17/07/2006)

EXTRACT: Not all gifts are well-received though. Oil giant Shell angered some of its investors by giving them mugs to commemorate the company’s historic restructuring of its British and Dutch parts into one company last year. The mugs seemed particularly inappropriate for the thousands of holders in its Dutch arm who had been left with a large tax bill.

THE ARTICLE

Questions, questions, questions. Annual general meetings are full of them. Yet this year surprisingly few of them have been about company business. Instead, the Annual General Meetings of 2006 seem (so far) to have been dominated by weightier issues, such as “where’s our lunch?” or “why is the writing so small in the annual report?”

Computershare, the share registrar company which counts the votes, reckons this is because companies have (by and large) managed to avoid causing the big bunfights over pay and pensions which have marred previous years’ agms.

So other questions have dominated the agendas – such as what’s on the menu. One particular favourite question this summer, reported by Computershare, was: “It is the first time that I have been to your agm and I object to being given a brown carrier bag with a sandwich, piece of fruit and a frozen biscuit to eat – why have you done this?” Why, indeed?

Shareholders, like Napoleon’s army, do not march well on an empty stomach. Investors at a meeting held by Hilton over whether to sell off its hotels business apparently got quite exercised over a decision to scale back the buffet on offer, from a veritable banquet at previous meetings to something smaller which befits a chain of bookies. That’s the price of downsizing, I suppose.

Investors at Diageo’s agm were also unhappy when the perk of a free bottle of whisky stopped. The chairman muttered something to the effect that the company had ended the free tipple after realising that it did not necessarily promote responsible drinking.

Many shareholders at agms clearly view themselves as re-inventions of Victor Meldrew, hoarsely whispering “Shut up!” at anyone who goes on for too long. One question that kept cropping up this summer was: “Why is the type-face in the annual report so small?”

There was a novel twist on this theme last week when an EMI investor complained that the colour contrast in the annual report was hard to read under electric strip lighting.

Little wonder that chairmen can have problems controlling this unruly rabble. The trick is to suggest to the investor that he or she ask a question, rather than make a rambling speech. But this can be difficult.

One individual at a recent annual meeting of the Financial Services Authority asked a question which rapidly turned into a denunciation of those involved in the Equitable Life case. After 20 minutes the man was on the verge of tears. Another female investor at a small property recruitment company made a startling admission earlier this month: “I am here with an ulterior motive. I am collecting a fund to save London’s police horses who are being put out to pasture.”

The astonished directors discovered that she’d bought about £30 of shares in the company to plead her case to a wider audience.

Companies, of course, have found novel ways to try to placate the lunatic fringe. Take the Marks & Spencer agm, where investors who want to complain about their local store are politely asked to address their questions to “customer service advisers” outside the hall. When they get outside, of course, they are so overwhelmed by the M&S goodies – a sumptuous lunch and afternoon tea is on offer – that most of them forget what their complaint was.

M&S has clearly cottoned on to the fact that today’s private investors want more than just capital growth and a dividend cheque every year (the board sent them money-off vouchers as a thank you after M&S saw off the approaches of Sir Philip Green).

Not all gifts are well-received though. Oil giant Shell angered some of its investors by giving them mugs to commemorate the company’s historic restructuring of its British and Dutch parts into one company last year.

The mugs seemed particularly inappropriate for the thousands of holders in its Dutch arm who had been left with a large tax bill.

The key to a successful agm is in the hands of the chairman. Often this involves being courteous in the face of enemy fire, such as the repeated catcalls of “shame” and “shame on you” whenever a board member was introduced at BAE Systems’ agm this year.

But, for a chairman of a listed company, there is nothing more terrifying than a private investor who knows his or her onions.

Keen investors such as John Farmer or John Cruickshank tour the agms asking detailed questions about total shareholder return and dividend policy, prompting finance directors to leaf hurriedly through the annual report before slipping a note to the chairman.

But the queen of the question at agms must be Mary MacKenzie, a retired school teacher who for years held the chairmen of some of the nation’s biggest companies in the palm of her hand.

A small, slight lady, she would stand up at the agm of Scottish Widows or Royal Bank of Scotland, and grill the chairman with a series of detailed questions. She met her match just once, at the last agm of Bank of Scotland before it merged with Halifax in 2001.

Surveying the board of Bank of Scotland at the Edinburgh International Conference Centre, she wanted to know why most of them were men.

She asked Sir John Shaw, the then-Governor of the Bank of Scotland, if he would provide a list of the management broken down by age and sex.

Sir John drew himself up to his full height. “My dear Miss MacKenzie,” he began. “We are all broken down by age and sex…”

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