My 100th BD column: more businesslike AGMs

“Kenyan shareholders may soon have to make do without the Annual General Meeting perks should a move by Safaricom be adopted by other listed companies.
The mobile firm’s roster of over 800,000 shareholders – the largest number in corporate Kenya’s history – has pushed it to identify cost-cutting measures during AGMs.
Chief among them is doing away with the usual free lunch, transport and branded giveaways, which perks have become synonymous with the meetings”

Business Daily (1 July, 2009)

This is my 100th article for the Thought Leadership column. I have been on this page for nearly two years now – time clearly flies when you’re having fun.

The milestone coincides with the news reported in this publication that our largest company has announced a move towards ‘no-frills’ annual general meetings. This is a very welcome development, and one that I applaud warmly. Les Baillie, Safaricom’s very capable Chief Investor Relations Officer, was on the ball when he said that “shareholders seem to treat AGMs more like social gatherings than an opportunity to engage the management on key issues.”

Hear hear. As someone who has had to attend rather too many AGMs in my time, that rings utterly true. As I have written elsewhere, AGMs in Kenya have become a circus where the main attractions are the giveways, entertainers, lunches. Mute directors are paraded before shareholders, like models. That matters not, because most of the shareholders seem interested in only the freebies.

I have often sat in despair watching dance troupes, or listening to utterly inane and irrelevant questions from the floor. All companies, no matter how successful, have very serious issues that need airing before shareholders. Those issues are almost never raised or addressed in AGMs, which have become silly annual jamborees where shareholders arrive in trucks and buses from the sticks, have a good day out and then go home, proud of ‘their’ company because it gave them a T-shirt. And sadly, many companies encourage this non-participation because it allows them to have many contentious decisions passed quickly.

A proper AGM should be something else altogether. It should be a sober and mature affair in which the management and directors report back to their owners, and where investors are able to interrogate the doings of the company with decorum and seriousness. A shareholder should treat it as an opportunity to understand the numbers and the strategies that drive them, and to question and challenge them with intelligence. That would be good for everyone involved, including the management.

So I do hope that Safaricom’s long overdue initiative is taken up by others. The telecoms giant is, of course, motivated mainly by cost: no-frills AGMs might save it hundreds of millions. But the principle is more important than the cost saving. We must strive to make our meetings with shareholders genuine, sombre and productive affairs. It is in everyone’s interest to have sensible dialogue about what a company does and why. Pandering to the ignorance of the average shareholder is a disingenuous way of keeping all decision-making in the hands of a chosen few. And that ultimately leads to reversals of fortune.

What we must always protect, however, is the need for transparency and free sharing of all relevant information. I would hate to see the ‘no-frills’ approach become an excuse for not disclosing important information.

Let us retain perspective. Kenya’s shareholder culture has a lot of maturing to do. I do not expect an overnight transformation of AGMs into sharp affairs where savvy shareholders shoot off some very informed questions. That may take a while, and even in more advanced economies AGMs always have the air of a stage-managed performance. But what the Safaricom move may do, if followed by others, is to move us towards a better way of managing this crucial relationship.

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