A company’s annual general meeting is the only time that individual shareholders get to have their say, so it’s not surprising that some use the occasion to voice their frustrations or grievances.
So they have every right to – it is their company.
But problems arise where shareholders abuse this privilege. One such case occurred at a meeting which I attended in Melbourne last month. This case highlighted the need for shareholders to observe reasonable manners and etiquette - even when voicing grievances or frustrations.
Shareholders have a right to challenge directors on tough issues. They have no right to make unsubstantiated allegations or personal attacks.
Drama at the Orica AGM
The drama took place at the annual general meeting of Orica Ltd, a multinational Australian company which manufactures a range of chemical products, during the discussion about the financial, directors’ and auditor’s reports.
One speaker, ‘Clancy,’ launched a tirade of disparaging remarks. (Real names have been quoted here since a podcast of the entire meeting is on public record on the company’s website)
He began:
“Yeah last year I raised the issue of (accounting firm) KPMG carrying out a false audit of this company ..”
In his one minute denunciation, Clancy went on to allege that:
• KPMG were ‘still’ issuing false audits of the company.
• Don Mercer, the company chairman, “should be in jail with Karl Williams” (a notorious Melbourne gangland figure)
• Mr. Mercer was part of the Melbourne business set – “the largest crime syndicate in Australia.”
• Mr. Mercer and others had only gotten away with it (his alleged criminal behavior) because of Managing Director Graham Liebelt’s friendship with former Australian Treasurer Peter Costello, who “looked after the Melbourne business set” and was “the most corrupt politician to sit in politics in Australia.”
(There were never any suggestions of impropriety by Mr. Costello throughout his eleven years as Federeral Treasurer of Australia between 1996 and 2007)
Allegations in context
To put these claims into context, a number of points should be noted.
First, Clancy did not provide or refer to any form of evidence in support of his allegations.
Second, Mr. Mercer enjoys an outstanding reputation within the Australian business community - earned over many years of service on the board of a wide range of high profile Australian companies.
Third, immediately prior to Clancy’s attack, a representative from the Australian Shareholders’ Association had given the company a glowing report on a number of corporate governance related matters, saying that the ASA “could only be complimentary,” and that shareholders should be “very satisfied.”
In short, these were nothing more than wild allegations.
Let’s hold off on unsubstantiated allegations
Shareholders are the collective owners of the company – by whom directors (and senior executives) are employed and to whom they are accountable.
They have every right to voice their frustrations or concerns, just as they have every right to challenge directors on areas where performance or behavior have not been up to standard. They need not be ‘nice,’ and should not feel under any restraint toward asking difficult questions. The annual general meeting is there chance to do so, and they should not hold back.
But there are limits. Directors have a professional relationship with shareholders and deserve to be treated accordingly. This means answering tough questions, but not putting up with unwarranted personal attacks, unsubstantiated allegations or defamation.
In the case of Orica, Don Mercer did not seem overly worried about the whole situation. He’s been around the traps a long time - this was water off a duck’s back to him.
Nor did many of the other shareholders attach a great deal of credibility to Clancy’s allegations.
Nevertheless, board members should not have to put up with this kind of thing.
Shareholders must be free to challenge directors or make their feelings known.
But they have no right to make personal attacks or unsubstantiated allegations – directors should not have to put up with these.
Over to you
What are shareholder meetings like in your country?
Are they generally productive in terms of giving shareholders a fair opportunity to voice their concerns?
Are shareholders generally polite and well behaved?
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