This document summarizes trends in annual general meetings (AGMs) in Australia, including changes in technology, voting practices, and the role of proxy advisors. It notes that industry bodies have requested submissions on how to improve AGMs and shareholder engagement. New technologies like mobile voting sites are impacting AGM formats and voting channels. The growing influence of proxy advisors is affecting corporate strategy. Key topics of discussion at AGMs in 2012 included executive pay and board diversity. Online voting and poll voting have increased in popularity. The "two strikes" rule on remuneration reports saw fewer companies receive a first strike in 2012.
The Changing AGM Landscape (Link Stream - April 2013)
1. Link Stream
The Changing AGM Landscape
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Data contained in this document is based on issuer meetings managed by Link.
2. Setting the scene: A time of change
Industry change - CAMAC, the Commonwealth‟s corporate
law advisory body, asked for submissions from key
stakeholders in 2012 regarding the Annual General Meeting
(AGM) and securityholder engagement
Technology change - Rapidly changing technology and the
increased use of mobile devices is likely to impact the format
of AGMs and voting channels
Changing roles - The growing role of the
proxy advisor and its impact on voting
outcomes is likely to impact corporate IR
strategy
3. A look back in time…
2000
2001
2004
2005
2006
2007
2011
2012
Direct voting first considered by Companies
and Securities Advisory Committee
ASX „Listing Rules Box‟ introduced
Electronic proxy voting under
CLERP 9 reforms
Mobile voting sites introduced
and legislation amended for
Chairman‟s open votes
2 Strikes Rule and KMP
voting exclusion
Direct Voting first offered at an AGM
Direct Voting option with
constitutional changes
Electronic handset
voting introduced
4. Key Interest Areas
AGM Hot
Topics
The AGM landscape continues to evolve with new trends and increased
change in the following areas.
Two Strikes
Rule
Technology
Changing
Role of Proxy
Advisor
5. AGM Hot Topics 2012
Remuneration of Directors
Long Term Incentives
Performance and Financials
Board Size and Diversity
Political Donations
Corporate Social Responsibility
The Australian Shareholders
Association (ASA) regularly
raised the issue of what
constitutes a Long Term
Incentive, arguing this should
be re-tested and that directors
should be required to hold
vested securities post a vesting
event.
6. At one meeting a pre-recorded presentation from a
Director joining the Board was played in their absence.
AGM 2012 Observations
Remuneration Issues dominated discussion and proceedings
Committee Chairmen were frequently asked to address the
meeting and respond to specific questions from the floor
Directors commonly addressed the meeting when standing for
election/re-election
Issuers were divided on whether to conduct a “vote by show
of hands” first where resolutions were to be decided by poll
Polls were moved from the floor at two meetings
7. Key Interest Areas
AGM Hot
Topics
Two Strikes
Rule
Technology
Changing
Role of Proxy
Advisor
8. Technology
Technology developments in the following three areas are
continuing to make the most significant impact on AGMs.
Voting Practices
Communication Practices
Virtual Meetings
9. Mobile Devices – Customised
smartphone / tablet voting sites
Express ID – Email with a secure
personalised hyperlink to vote online
Institutional Voting Site – Dedicated
secure site for Nominees &
Custodians to lodge votes online
Electronic Handset - Enabling
securityholders to participate in
electronic poll voting at the meeting
Technology & Voting Practices
Voting technologies continue to evolve
10. 0%
20%
40%
60%
80%
100%
Voted Issued Capital
Proxy 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 2010
Last
7 days
Mid-PointFirst
14 days
Technology & Voting Practices
Voting Timeline Trends
11. 0%
10%
20%
30%
40%
50%
60%
70%
S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 201+
2010
2011
2012
Technology & Voting Practices
% Issued Capital Voted by
S&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 below
45%
12. 12
5%
6%
7%
8%
9%
10%
2010 2011 2012
SecurityholdersVoting
All Clients
S&P/ASX 100
S&P/ASX 101-200
S&P/ASX 200+
Technology & Voting Practices
Securityholder Voting Trends
Overall securityholder voting volumes dropped by 13% since 2010
S&P/ASX100 shows the least decline, dropping only 8.9% since
2010
13. 13
0%
20%
40%
60%
80%
100%
S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 200+ All AGMs
2010
2011
2012
Technology & Voting Practices
Online Voting Trends by
S&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
15. 58%
23%
19%
All Resolutions
1 Resolution
No Polls
Technology & Voting Practices
Poll Voting in 2012
81% of S&P/ASX 100 Issuers conducted voting by poll in 2012
Polling provides definitive results essential for remuneration resolutions
16. 16
Technology & Communication
Customised Mobile Device Voting
The first customised mobile device voting sites were launched in 2012
Positive feedback received on voting experience by securityholders
17. 17
Extends the reach of your AGM to:
Securityholders unable to attend meeting
Prospective securityholders
Media
Facilitates transparent governance
Ensures an accurate record of
proceedings
Can be viewed at any time and any
location
Technology & Communication
Webcasting
18. Hybrid meetings are gaining popularity overseas where the
meeting is „live‟ and includes a virtual online component
The first meeting to include a virtual component was held by
Intel Corporation in the United States in 2009
Regulatory Reform Bill in New Zealand was passed in
2012, allowing entities to facilitate interactive meetings online
Interactive meeting technology is not currently used in
Australia but this is expected to change in the future
Technology & Virtual Meetings
19. Key Interest Areas
AGM Hot
Topics
19
Two Strikes
Rule
Technology
Changing
Role of Proxy
Advisor
20. 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 spill
meetings
Spills avoided - both spill meetings resulted in the re-election
of nominated Board members
Legislation amendments clarified the Chairman‟s ability to
vote undirected proxies in favour of the Remuneration Report
Season 2 Results
21. Batter Safe! Two Strikes Rule
Proxy Solicitation Campaigns to identify and track underlying
securityholder voting intentions and ensure votes are recorded
Targeted Outbound Call Campaigns to retail securityholders to
clarify voting intentions
Chairman‟s Letter outlining remuneration policy changes and
addressing any perceived or reported securityholder concerns
Strategies to avoid a Strike
22. Key Interest Areas
AGM Hot
Topics
22
Two Strikes
Rules
Technology
Changing
Role of Proxy
Advisor
23. The major Proxy Advisors are Glass Lewis & Co. and
Institutional Shareholder Services (ISS)
Proxy Advisors provide critical voting recommendations to
institutional securityholders
Ownership Matters is the research provider to the
Australian Council of Super Investors (ACSI) so have an
indirect influence on super fund members
Proxy Advisors
Who are the key players?
24. 24
Superannuation funds own a greater portion of public entities
than ever before
Voting by underlying super funds has increased in recent
years
Institutional holders increasingly follow Proxy Advisor voting
recommendations
Asset managers are often bound to vote in line with Advisor
recommendations
Investment Managers are increasingly influenced by super
advisors such as ACSI and Ownership Matters
Extended reach via media may serve to further influence
securityholder sentiment
Proxy Advisors
The influencing factor
25. For further information please contact your Client Relationship Manager or visit
www.linkmarketservices.com.au
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