Friday, December 16, 2016

A tamasha called 'AGM'

Some time ago, I saw a ‘Bottom Liners’ cartoon in The Hindu wherein a company’s Chairman is informing the shareholders , “I wanted to share some good news. Unfortunately I can’t seem to remember what it was.”   This triggered my desire to understand what typically goes on in the Annual General Meeting (AGM) of shareholders of a company. I attended a few AGMs and felt amply entertained.
AGM is a legal compulsion mainly for the purpose of approving audited financial statements, electing directors and appointing statutory auditors. In addition, it gives an opportunity to shareholders to get to know their company better. However, few shareholders are interested in attending the meeting save for the purpose of receiving sweet packets.

I found to my amazement that shareholders and chairpersons fall into easily noticeable stereotypes. The shareholders are classifiable into value-enhancers (or the thrifty ones), carping critics, paraphrasers (aka the filibusterers) and serial attendees.
 Chairpersons may be martinets, delegators, charmers or the nonchalant.

Value-enhancing shareholders: These thrifty shareholders are obsessed with the idea of maximising the benefits they derive from the company. They may have only five shares, but these five will be split in the names of five different members of the family. Thus they get five sweet packets. The value of these packets may be more than the quantum of dividends they get from the company. Some are so time-conscious that they leave immediately after sweets are obtained. Some others do not mind getting into the AGM hall with their big bags containing multiple sweet packets and dozing off for some time.
Carping critics: These fault-finders find the company’s annual report to be a cornucopia of information to criticize the company’s management. They mesmerize the meeting with their statistical analysis of company’s poor performance. Some of them double up as value-enhancers as noted above and they compare and contrast the market prices of sweets distributed by the instant company and other companies. There are shareholders who cavil at the choice of venue and timings of the meeting if company’s performance is not bad enough to warrant criticism. At the other extreme, there are ardent admirers of the company who praise the company for shareholder-friendliness if handsome dividends are declared and applaud the company for its emphasis on conservation of funds for growth if dividends are slashed.
Paraphrasers: These wearisome shareholders deal with the annual report para by para and figure by figure. In their desire to be comprehensive in analysis, these stodgy shareholders take the liberty of misinterpreting the figures that they don’t understand thereby causing consternation in the minds of Board members some of whom may be equally clueless about company’s performance. Some chairpersons patronize these paraphrasers because they ensure that the time available for meaningful discussion is thereby filibustered away.
Serial attendees: These are busy shareholders who have a series of AGMs to attend the same day. They do not want to deny their co-shareholders the benefit of their views. So, despite their hectic schedule, they exercise their right to speak in the AGM. Three minutes into their speech when they appear to be ready to zero in on a crucial issue, they regret their inability to continue their sagacious speech any further because they are in a hurry to attend another AGM.
Some shareholders exhibit a combination of these traits making the AGMs even more lively.

Chairpersons are an equally interesting lot. The martinet who enforces total discipline in the meeting will not brook any light-hearted comment from any shareholder. Any person pointing out some deficiency in company’s performance will be strictly warned that the company reserves the right to proceed against him for defamation. Whenever a shareholder indulges in a meandering talk or strays from inane and courteous utterings, the martinet-chairperson applies the guillotine immediately.
Delegators: If a shareholder asks an embarrassing question, the delegator-chairperson is only too quick to pass on the query to company’s secretary or some other official for their response. The chairperson proudly calls this abdication as empowerment of his officials. If the shareholder turns obstreperous, the chairman thanks him for his thoughtful remark and moves on to the next shareholder aspiring to talk.
Charmers: Charming chairmen take the sting out of any damaging remark by simply smiling it away. He is laconic in oral observations but liberal in facial expressions. Thorny shareholders will be requested by the chairman to grace his office with their presence over a cup of coffee. The charmers can disarm any disgruntled shareholder with ease.
The nonchalant chairman: Some seasoned chairmen don’t give two hoots what shareholders say. They believe that “every dog and every shareholder have their day, but every company and every chairman have their way.”
Of course, there are AGMs which are largely attended and where meaningful discussions do take place thanks to the presence of knowledgeable shareholders and responsive chair of the Board. But these are few and far between.

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