The Changing AGM Landscape (Link Stream - April 2013)
Link StreamThe Changing AGM LandscapeAll material copyright @ 2013 Link Market Services Limited (Link) except third party proprietary logos and websites.Whist all efforts have been made to verify the accuracy of data contained herein, Link makes no representation nor warranty for third party reliance.Data contained in this document is based on issuer meetings managed by Link.
Setting the scene: A time of change Industry change - CAMAC, the Commonwealth‟s corporatelaw advisory body, asked for submissions from keystakeholders in 2012 regarding the Annual General Meeting(AGM) and securityholder engagement Technology change - Rapidly changing technology and theincreased use of mobile devices is likely to impact the formatof AGMs and voting channels Changing roles - The growing role of theproxy advisor and its impact on votingoutcomes is likely to impact corporate IRstrategy
A look back in time…20002001200420052006200720112012Direct voting first considered by Companiesand Securities Advisory CommitteeASX „Listing Rules Box‟ introducedElectronic proxy voting underCLERP 9 reformsMobile voting sites introducedand legislation amended forChairman‟s open votes2 Strikes Rule and KMPvoting exclusionDirect Voting first offered at an AGMDirect Voting option withconstitutional changesElectronic handsetvoting introduced
Key Interest AreasAGM HotTopicsThe AGM landscape continues to evolve with new trends and increasedchange in the following areas.Two StrikesRuleTechnologyChangingRole of ProxyAdvisor
AGM Hot Topics 2012Remuneration of DirectorsLong Term IncentivesPerformance and FinancialsBoard Size and DiversityPolitical DonationsCorporate Social ResponsibilityThe Australian ShareholdersAssociation (ASA) regularlyraised the issue of whatconstitutes a Long TermIncentive, arguing this shouldbe re-tested and that directorsshould be required to holdvested securities post a vestingevent.
At one meeting a pre-recorded presentation from aDirector joining the Board was played in their absence.AGM 2012 Observations Remuneration Issues dominated discussion and proceedings Committee Chairmen were frequently asked to address themeeting and respond to specific questions from the floor Directors commonly addressed the meeting when standing forelection/re-election Issuers were divided on whether to conduct a “vote by showof hands” first where resolutions were to be decided by poll Polls were moved from the floor at two meetings
Key Interest AreasAGM HotTopicsTwo StrikesRuleTechnologyChangingRole of ProxyAdvisor
TechnologyTechnology developments in the following three areas arecontinuing to make the most significant impact on AGMs.Voting PracticesCommunication PracticesVirtual Meetings
Mobile Devices – Customisedsmartphone / tablet voting sites Express ID – Email with a securepersonalised hyperlink to vote online Institutional Voting Site – Dedicatedsecure site for Nominees &Custodians to lodge votes online Electronic Handset - Enablingsecurityholders to participate inelectronic poll voting at the meetingTechnology & Voting PracticesVoting technologies continue to evolve
0%20%40%60%80%100%Voted Issued CapitalProxy Forms Lodged 85% of Voted Issued Capital is lodged in the 7 days prior to proxy close Institutional holders vote late in period and represent majority of votes Retail holders vote early in large volumes but represent minority of votes 26% drop in proxy forms lodged per meeting since 2010Last7 daysMid-PointFirst14 daysTechnology & Voting PracticesVoting Timeline Trends
0%10%20%30%40%50%60%70%S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 201+201020112012Technology & Voting Practices% Issued Capital Voted byS&P/ASX Index 60% of issued capital continues to be voted in the S&P/ASX 200 Issued capital voted outside the S&P/ASX 200 has dropped below45%
125%6%7%8%9%10%2010 2011 2012SecurityholdersVotingAll ClientsS&P/ASX 100S&P/ASX 101-200S&P/ASX 200+Technology & Voting PracticesSecurityholder Voting Trends Overall securityholder voting volumes dropped by 13% since 2010 S&P/ASX100 shows the least decline, dropping only 8.9% since2010
130%20%40%60%80%100%S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 200+ All AGMs201020112012Technology & Voting PracticesOnline Voting Trends byS&P/ASX Index Online Voting was used by 87% of AGMs managed by Link in 2012 Online voting take-up has increased by 16% since 2010
0.000.050.100.150.202010 2011 2012%SecurityholdersTechnology & Voting PracticesSecurityholder AGM Attendance AGM attendance has declined by 5% per year on average since 2010 Attendance is commonly 25-50% lower for Issuers who hold theirAGM‟s interstate
58%23%19%All Resolutions1 ResolutionNo PollsTechnology & Voting PracticesPoll Voting in 2012 81% of S&P/ASX 100 Issuers conducted voting by poll in 2012 Polling provides definitive results essential for remuneration resolutions
16Technology & CommunicationCustomised Mobile Device Voting The first customised mobile device voting sites were launched in 2012 Positive feedback received on voting experience by securityholders
17 Extends the reach of your AGM to: Securityholders unable to attend meeting Prospective securityholders Media Facilitates transparent governance Ensures an accurate record ofproceedings Can be viewed at any time and anylocationTechnology & CommunicationWebcasting
Hybrid meetings are gaining popularity overseas where themeeting is „live‟ and includes a virtual online component The first meeting to include a virtual component was held byIntel Corporation in the United States in 2009 Regulatory Reform Bill in New Zealand was passed in2012, allowing entities to facilitate interactive meetings online Interactive meeting technology is not currently used inAustralia but this is expected to change in the futureTechnology & Virtual Meetings
Key Interest AreasAGM HotTopics19Two StrikesRuleTechnologyChangingRole of ProxyAdvisor
Batter Up! Two Strikes Rule 60% decrease in Issuers receiving their first strike in 2012 4 second strikes were received in 2012, resulting in 2 spillmeetings Spills avoided - both spill meetings resulted in the re-electionof nominated Board members Legislation amendments clarified the Chairman‟s ability tovote undirected proxies in favour of the Remuneration ReportSeason 2 Results
Batter Safe! Two Strikes Rule Proxy Solicitation Campaigns to identify and track underlyingsecurityholder voting intentions and ensure votes are recorded Targeted Outbound Call Campaigns to retail securityholders toclarify voting intentions Chairman‟s Letter outlining remuneration policy changes andaddressing any perceived or reported securityholder concernsStrategies to avoid a Strike
Key Interest AreasAGM HotTopics22Two StrikesRulesTechnologyChangingRole of ProxyAdvisor
The major Proxy Advisors are Glass Lewis & Co. andInstitutional Shareholder Services (ISS) Proxy Advisors provide critical voting recommendations toinstitutional securityholders Ownership Matters is the research provider to theAustralian Council of Super Investors (ACSI) so have anindirect influence on super fund membersProxy AdvisorsWho are the key players?
24 Superannuation funds own a greater portion of public entitiesthan ever before Voting by underlying super funds has increased in recentyears Institutional holders increasingly follow Proxy Advisor votingrecommendations Asset managers are often bound to vote in line with Advisorrecommendations Investment Managers are increasingly influenced by superadvisors such as ACSI and Ownership Matters Extended reach via media may serve to further influencesecurityholder sentimentProxy AdvisorsThe influencing factor
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