It’s that time of year again – Notices of Meeting are hitting the ASX platform and flooding inboxes, signalling that the AGM season is about to kick off.
And what a difference 12 months has made.
The gold bulls are toasting record highs, copper is the clear battery metals winner and – for punters and producers alike – Rio Tinto’s (ASX: RIO) $US6.7 billion cash tilt this week at Arcadium Lithium (ASX: LTM) has provided a glimmer of hope that the lithium bust has finally bottomed out.
Annual results reporting fatigue and the perception that the AGM is no more than a tick-box exercise are two of many reasons why companies often dismiss this mandated annual gathering for shareholders as one more expensive procedural obligation before the Christmas break.
But for retail investors, the AGM is a rare opportunity – and often the only one – to meet and ask questions of those charged with delivering value on their investments.
It is the perfect platform to engage, provide context and reassurance and outline the company’s direction for the year ahead.
Too often companies dismiss the significance of their retail shareholder base – yes, the voting is by and large dominated by the top 30 investors. But often it is the retail shareholder who drives liquidity and daily share price movements and should be an advocate for your company – if only you engaged with them.
Think of the AGM as having two parts – the mundane (or not so mundane) formalities and voting on resolutions, followed by an engaging update to shareholders on the company’s year gone by and the outlook.
The three prongs of an engaging company update are to ensure it includes a clearly communicated corporate narrative, is structured as a well-prepared presentation and is delivered with confidence and empathy.
The corporate narrative is not ‘spin’ but the articulation of a company’s commitment and plan to deliver shareholder value. Getting it right is important though not always easy.
Malcolm Forbes might have repurposed the old saying ‘there’s no such thing as a dumb question’ when he said “the smart ones ask when they don’t know. And sometimes when they do”.
So here are some smart questions from the Investor Insight team to help prepare for an engaging AGM update:
- What are your short-term goals? And your long-term goals?
- How will you achieve your goals? And within what timeframe?
- What is in your control?
- And what is outside of your control?
- How do you communicate success when the share price doesn’t want to budge?
- And how do you communicate success when things happen that are outside of your control?
How you package up the corporate narrative matters. A strong presentation is a showcase of a company’s strengths, wins and milestones and can address its concerns, potential roadblocks to success and macro themes.
It is therefore important that you ask yourself whether the company presentation articulates the corporate narrative as well as the value proposition. Does it align with the chair’s address? Does each slide serve a purpose? What information is included and why, and what should be excluded? Make sure the presentation addresses roadblocks and macro themes.
And finally, make sure the presentation suits the chair and CEO’s presentation style, the slides are in order and the overall work aligns with the company brand.
Practice makes perfect, which is why the three Ps of public speaking are practice, practice and more practice. A confident, reassuring, empathetic and engaging voice can deliver clearly defined goals and the path to achieve them while also addressing operational and market concerns.
So get practicing and remember to define in your mind who the audience is. Retail shareholders do not necessarily have the same level of expertise and understanding as their institutional counterparts so ensure that the presentation can be understood by all. Put yourself in the shareholder’s shoes and ask yourself:
- If you were a long-term shareholder, what would you expect?
- If you were a disgruntled shareholder, what would you think?
- How can you promote curiosity from the floor?
- What questions do you anticipate, and how can you weave the answers into your presentation?
- How will you answer difficult questions?
The logistics matter, too. The best-prepared presentation can come unstuck by something as innocuous as a damaged laptop cord, a corrupted file or poor WiFi – or the microphones do not work or the webcasting service is down. It is always good to have technical support on hand.
Choose an AGM venue that is easy to find, has nearby parking and caters for shareholders with accessibility challenges. Ensure the room is welcoming rather than making the shareholder feel they are a burden just for attending.
Finally, remember your AGM may be just one of many that the individual shareholder will attend this season. Stick around and make introductions, or reacquaintances, with the people whose investments you are held responsible for.
And do not underestimate the endearing power of fresh pastries and good coffee.
