the changing agm landscape (link stream - april 2013)
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Link StreamThe Changing AGM Landscape
All 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 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
A look back in time…
2000
2001
2004
2005
2006
2007
2011
2012Direct 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
Key Interest Areas
AGM Hot Topics
The AGM landscape continues to evolve with new trends and increased change in the following areas.
Two Strikes RuleTechnology
Changing Role of Proxy
Advisor
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.
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
Key Interest Areas
AGM Hot Topics
Two Strikes RuleTechnology
Changing Role of Proxy
Advisor
TechnologyTechnology developments in the following three areas are continuing to make the most significant impact on AGMs.
Voting Practices
Communication Practices
Virtual Meetings
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 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 2010
Last 7 days
Mid-PointFirst 14 days
Technology & Voting PracticesVoting Timeline Trends
S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 201+0%
10%
20%
30%
40%
50%
60%
70%
201020112012
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
2010 2011 20125%
6%
7%
8%
9%
10%
All ClientsS&P/ASX 100S&P/ASX 101-200S&P/ASX 200+
Se
curi
tyh
old
ers
Vo
ting
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% since
2010
13
S&P/ASX 100 S&P/ASX 101-200 S&P/ASX 200+ All AGMs0%
20%
40%
60%
80%
100%
201020112012
Technology & Voting PracticesOnline 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
2010 2011 20120.00
0.05
0.10
0.15
0.20
% S
ecu
rityh
old
ers
Technology & 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 their
AGM’s interstate
58%
23%19%
All Resolutions1 ResolutionNo Polls
Technology & 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
16
Technology & 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 of proceedings
Can be viewed at any time and any location
Technology & CommunicationWebcasting
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
Key Interest Areas
AGM Hot Topics
19
Two Strikes RuleTechnology
Changing Role of Proxy
Advisor
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
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
Key Interest Areas
AGM Hot Topics
22
Two Strikes RulesTechnology
Changing Role of Proxy
Advisor
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 AdvisorsWho are the key players?
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 AdvisorsThe influencing factor
For further information please contact your Client Relationship Manager or visit www.linkmarketservices.com.au
THANK YOU
About Link Market Services Limited
Link is Australia’s premium share registry and a part of the Link Group global network, providing company, employee and investor financial services worldwide. In Australia alone, the Link Group manages over 10 million account records and processes more than 60 billion dollars in payments every year.
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