The O'Brien Column: Bloodyminded investors can get in the way of annual meetings

Friday 25th May 2001

Back in the 'good old days' the faithful listened respectfully to Sir Ron Brierley, suffered a few people who wanted to ask questions (not too many, mind, or the faithful got restless) and adjourned for the country's best after-match function

The 2001 annual meeting round could see some interesting gatherings, given the apparent increase in shareholder stroppiness as shown at meetings over the past two years.

A fledgling organisation planned to act as a watchdog for small shareholders has been set up and the regular questioners of directors seem ready to indulge themselves again.

There are a few people who attend many meetings to grill the directors about a company's affairs and the directors' stewardship.

It is often hard to decide whether they act out of altruistic concern for the many small shareholders with stakes in listed companies or from a desire to hear their own voices, make an impression and get guaranteed space in the daily press.

A good stoush at a company meeting gets high billing on the financial pages.

A second group of questioners query directors on matters, and in a manner, that can be dismissed as just plain silly.

A third lot ask constructive questions and use their opportunities sparingly but, unfortunately, they rarely make good copy.

Although I was not present at the Trans Tasman Properties special meeting this week, reports suggested it was a lively affair, with shareholders hammering the directors and tossing out a scheme to swap shares for debt, although convertible note holders approved the proposal.

Contact Energy's meeting in January saw shareholders questioning directors about payments to the former chief executive, the price paid for the company when it was bought from the government, directors fees and the then share prices.

Affco shareholders (see page 36) in February were also concerned about the share price and the lack of a dividend.

Directors are usually questioned when companies underperform and/or are in general strife.

Life is easier when entities do well, subject to the people who have an uncontrollable pathological urge to stand up and spout about any topic, however irrelevant to the company's affairs.

Brierley Investments was probably the best example of the contrast between the two types of meetings.

Back in the "good old days" the faithful gathered, often in great numbers, listened respectfully to Sir Ron Brierley, suffered a few people who wanted to ask questions (not too many, mind, or the faithful got restless) and adjourned for the country's best after-match function.

Then came 1998 when matters could have become a shambles, but for the decision to have Sir Ron chair the meeting.

The event started with a hostile reception for the directors, apart from Sir Ron, who was greeted with applause.

Company shareholders often have solid reasons for being upset with directors but there are occasions when some people are simply bloodyminded.

Their actions raise the question why they bother to hold the company's shares, particularly if they cast votes against proposals which are overwhelmingly carried.

There were two examples of the latter situation in recent weeks. Rio Tinto plc (the London-based arm of the dual listed companies' structure with Australian-listed Rio Tinto Ltd) held an annual meeting in April and voted on four resolutions.

A motion to authorise directors to allot shares was passed with 484.93 million in favour and 169,683 against.

Shareholders passed a resolution authorising directors to allot shares for cash and to "disapply" pre-emption rights with 482.85 million votes in favour and 2.24 million against.

A proposal to renew an authority for the company to buy back shares was approved 484.7 million votes to 401,763 and approval of a staff share ownership plan had 478.69 million votes for and 831,560 against.

The proposals were standard administrative procedures in any company and the voting showed massive approval for them.

A small minority thought otherwise, for reasons which were not apparent from the release to the Stock Exchange.

Nearer home, insurer and financial services group AMP had its annual meeting last week. The company had three directors up for re-election, two who retired by rotation and one who had been appointed since the previous annual meeting. Each director was re-elected on a show of hands. Proxy votes in favour were in the 248.73 million to 249.7 million range. Proxy votes against in each case ranged from 938,002 to 1.81 million.

Okay, someone out there had a snitch on the three seeking re-election but more was to come.

The company put forward 18 amendments to the constitution, six being one-word changes, or altering numerical references to other clauses.

Other amendments seemed relatively minor and in keeping with corporate practice and Australia's Corporation Law. The amendments were passed on a show of hands but the proxy votes had 255.54 million in favour and 1.77 million against.

The situation makes one wonder why the dissidents were owing the shares represented by the proxies.

AMP directors were hardly proposing a radical restructuring of the company's fundamental document but it seems some Aussies can be as stroppy as some New Zealanders.

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