Boards must monitor AGM expectations and developing trends

Australian annual general meetings (AGMs) have seen a transformation with the adoption of hybrid and virtual formats, propelled initially by COVID-19 restrictions and later by legislative amendments to the Corporations Act 2001. These formats have enhanced shareholder engagement and accessibility, particularly for geographically dispersed participants, with hybrid AGMs now favored for their inclusivity. 

However, Andrew Thain, Senior Managing Director at Sodali & Co, points out that AGMs have also become forums for shareholder dissent, especially concerning executive remuneration. He expects “the elevated number of strikes to continue” in 2024, driven by frustrations with corporate governance and discrepancies between executive pay and company performance. Thain highlights that investors are increasingly using votes to express discontent, especially when pay rises outpace general wage growth despite poor economic conditions. 

Sustainability and ESG reporting are also under scrutiny, with new mandatory climate reporting standards on the horizon. Michael Salvatico, Senior MD and APAC Head of Sustainability Solutions at Sodali & Co, emphasizes that “mandatory reporting will invoke the compliance function of boards,” yet boards should also view sustainability as integral to performance. Salvatico underscores the need for companies to address Scope 3 emissions, as stakeholder expectations now extend beyond climate strategies to broader sustainability issues. 

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