Investors have revolted against a plan by the treasurer, Josh Frydenberg, to make online-only shareholder meetings permanent, saying the move would allow company directors to avoid answering difficult decisions.
Fund manager Geoff Wilson, who spearheaded the successful campaign against Labor’s franking credits policy before last year’s election, told Guardian Australia he had mobilised his 90,000-strong army of shareholders to oppose the move.
Wilson, the chairman of Wilson Asset Management, wrote to shareholders in his company on Monday afternoon, urging them to make submissions to a review of the proposal that closes on Friday after a consultation period of just 12 days.
Holding AGMs online was allowed under coronavirus emergency rules introduced by Frydenberg in May, and the Treasury says making the change permanent “will provide companies flexibility when engaging with their shareholders, reduce costs and drive efficiencies”.
The emergency coronavirus rules are due to expire in March.
Investors, including Wilson, are concerned that virtual AGMs allow directors to skip difficult or embarrassing questions, or rephrase them to water them down.
Last year, company directors endured face-to-face confrontations with shareholders angry about everything from environmental issues to allegations of organised crime involvement at casinos (in the case of Crown Resorts) and a money laundering and child exploitation scandal (at Westpac).
Investors are alarmed that Frydenberg allowed less than a fortnight for submissions on the issue – a period that is one of the busiest times of the year for investors, with 65 AGMs to be held.
Opponents include proxy advisers, the Australian Council Of Superannuation Investors, which provides advice on governance issues to funds that together control more than $800m, and activist shareholder Stephen Mayne, whose question to Crown directors at the company’s meeting last year has become an important issue during an inquiry into the gambling empire’s fitness to hold a casino licence in Sydney.
Mayne spoke to Guardian Australia on Wednesday as he juggled three virtual AGMs.
He said the treatment of one of his questions by the troubled building supplies group Boral, as Guardian Australia was on the line, demonstrated his concerns about online-only meetings.
Mayne had a question for a specific director but it was instead answered by the company’s chair.
“This is a great example, I would have asked a follow-up question and said I want to hear from the director,” he said.
“It gives too much power to the chair.”
He said holding AGMs online also meant company management, who typically attend physical meetings, were less likely to be present to hear how shareholders felt.
“Who’s calling for it? The big end of town,” he said.
Dean Paatsch, a co-founder of proxy adviser Ownership Matters, said he would be in favour of a hybrid model, where a physical meeting is held but shareholders who are unable to attend can ask questions via the internet.
He said virtual AGMs were not the same as physical ones and the rules about how questions were asked at an online-only meeting were not clear.
“There’s something lost in translation – Zoom drinks are not the same as real drinks,” he said.
“Honestly, they’ve gone pretty well to date, but why take undue haste in ramming this consultation through?
“Why wouldn’t you just extend the Covid relief while you went through the pros and cons and came up with some rules of engagement?”
Louise Davidson, the chief executive of the council of superannuation investors, said the peak of the meeting season was the “wrong time to be radically changing the way AGMs are held”.
“In the AGMs we have already seen this year, it is apparent that – like a Zoom birthday party – something is definitely lost in the new format,” she said.
She said it made sense to get rid of hard copies of the paperwork, such as agendas and annual reports, that are given to shareholders at AGMs.
“However, changes to the way AGMs are held requires a longer consultation,” she said.
“AGMs are a core part of shareholders’ ability to hold companies to account. Significant changes to how they are run should not occur without proper scrutiny and consultation.”
Wilson told Guardian Australia Frydenberg’s proposal would move “the balance of power away from shareholders, particularly retail shareholders, and towards the board.”
“At a physical AGM every shareholder gets a chance to ask a question,” he said.
“That’s not the case at a virtual AGM.
“It really tilts the balance of power towards the big end of town.”