Investors want to shake hands with board members
During the coronavirus pandemic, the virtual Annual General Meeting was a blessing: it allowed Management Board members and shareholders to exchange ideas even when social life had come to a standstill. But now, two years after the official end of the pandemic, investors want to engage with the management in person again.
„Many investors want hybrid formats,“ says Katryna Krueger in an interview with Börsen-Zeitung. „They can talk directly to the management and supervisory boards on site - but have the option of participating virtually if time is short. This flexibility would match the modern age.“ This would also avoid the problem of the AGM dates clumping together in May.
As Head of German Research at ISS Governance, Krueger analyses how shareholder meetings are held on behalf of institutional investors and makes recommendations for voting behaviour. „Some board members find face-to-face meetings to be less productive and see them more as a social event,“ she says.
This observation is backed up by figures: According to an ISS analysis, two thirds of DAX-listed companies held their annual general meeting virtually this year. Compared to 2024, this means that hardly any companies have returned to in-person meetings. One laudable exception from the ISS perspective is Commerzbank, which had previously only held virtual meetings for five years. However, the bank has kept the option of switching back to the virtual format open.
A question of costs
The situation is different among MDax and SDax companies. The majority of them organise their AGMs in person. „The smaller a company is, the less likely it is to hold a virtual AGM,“ says Krueger. This is not least due to the high costs of recording and transmission technology, which are in no way inferior to television production. For larger companies, on the other hand, it is often cheaper to hold virtual meetings than to rent huge halls and cater for shareholders.
However, the institutional investors did not accept the cost arguments, as Krueger found out in her discussions. After all, the Annual General Meeting is the most important forum for exercising shareholder rights. From an investor's point of view, it should „not primarily be about the question of costs“.
Companies can decide
However, it is also true that the decision on the form of the Annual General Meeting is at the discretion of the management - provided that the shareholders have given the relevant authorisation. This authorisation must be renewed every five years at the latest. „Out of 150 requests for a virtual AGM, only three have been rejected: Siemens, Tui and Artnet,“ notes ISS expert Krueger.
In her opinion, however, companies should keep a very close eye on how strong the headwind from shareholders is - even if the proposals are ultimately approved. This is because the question of whether a virtual AGM should be held is one of the main reasons for most „no“ votes at AGMs.
The greatest resistance, however, continues to come from the remuneration of board members, as ISS Governance has analysed based on the voting results in this AGM season. „Some of the largest German companies have converged with their US competitors in terms of remuneration,“ says Krueger.
According to ISS, a third of the remuneration systems analysed in the Dax are unsatisfactory or inadequate, while in the SDax the figure is more than half. The MDax is somewhere in between. „From a shareholder perspective, the remuneration systems have not improved significantly compared to the previous year, and in some cases have even deteriorated.“
