The cost-of-living crisis, rising inflation, and the unpredictability of the geopolitical landscape have all had an impact on the AGM narrative this year. While shareholder activism and disruptions make headlines, corporations are prioritising ESG to have sustainable development practices.
The rise of digital meetings
Hybrid meetings are on the rise in 2023. Lumi data from January to June shows a 9% growth in hybrid meetings compared to 2022, with estimates showing this trend will continue.
Virtual meetings make up 44% of AGMs in the first half of 2023, hybrid meetings 35%, and in-person meetings 21%. The 9% increase in hybrid meetings over the previous year is substantial. Europe leads this trend with 41% of global AGMs.
This rise of hybrid is a good thing, as these meetings combine physical and virtual features to give investors flexibility to attend wherever they are.
ESG is a major topic at AGMs worldwide. Shareholders increasingly attend AGMs to make their voices heard on issues they are passionate about, and ESG tops the list. In the first half of 2023, concerns regarding diversity and closing the gender pay gap have been a recurring theme amongst board members.
To address these concerns, disclosure requirements are becoming more common. For instance, as of 2023, companies listed on the London Stock Exchange must publish annual reports which disclose ethnicity and gender equality.
Between July 2022 and May 2023, approximately 1,000 ESG shareholder proposals were submitted in the US. In the UK, there is mandatory reporting on climate-related financial disclosures, while in Canada, businesses are increasingly being held accountable for their climate targets and net-zero commitments.
Executive pay was a hot topic at this year's AGMs, especially as many are facing a cost-of-living crisis. As inflation rises, shareholders are scrutinising executive compensation and bonuses. UK FTSE 100 CEOs' remuneration has risen 12%, drawing criticism in the face of economic challenges.
Shareholders in various countries, like Australia, are voting against executive pay packages due to excessive bonuses. As economic issues persist, boards are increasingly challenged to justify executive compensation decisions.
To navigate the changing AGM landscape, companies should consider prioritising shareholder engagement. They can do this by considering purpose-built meeting venues or introduce a hybrid structure to allow all shareholders to directly engage with the board. Additionally, AGMs should prioritise social issues such as ESG.
As hybrid meetings, ESG, and executive pay become more important, 2023 AGMs reflect a changing corporate world. Companies must adapt, prioritise stakeholder interaction, and balance tradition and innovation to meet shareholder expectations. The future of AGMs lies in striking a balance between tradition and innovation to meet the evolving expectations of shareholders and stakeholders alike.
Read Lumi’s latest report here to learn more about this year's AGMs trends.
Articles | AGM