AGMs in 2014 report and employee share plans trends
Computershare has released two reports: one covering trends at the 2014 AGM season, and the other on employee share plan trends.
2014 AGMs — what are the trends?
The majority of the meetings covered in the report, Intelligence Report — Insights from company meetings held in 2014 Australia, were annual general meetings (AGMs), revealing ongoing and changing trends related to this important shareholder engagement event.
Covering over 750 meetings in 2014, Computershare’s report notes that the ongoing trend of a decline in shareholder attendance at AGMs continues with only 0.172 per cent of security holders attending company meetings in 2014. While at first glance shareholder attendance appeared to have increased slightly in 2014, the report reveals that this is purely due to doubled attendance at just one major public listed company's AGM. Computershare’s 2013 report showed that only 0.17 per cent of shareholders attended AGMs that year, reflecting a continuous downward trend in attendance over the last six years, with attendance dropping by approximately 10 per cent per year. If the unusual attendance numbers at one company meeting in 2014 are discounted, it is clear that shareholder attendance remains perilously low.
This is not the only measure of shareholder engagement that is a cause for concern. Voting participation remains minimal, with only 5.27 per cent of securityholders voting — this is a very slight increase of 0.3 per cent from 2013. Of more concern is that the report notes that there has been a 30 per cent decrease in the number of securityholders voting at company meetings over the last six years.
And while the amount of issued capital voted across all companies also remained flat in 2014, ASX50 companies saw a decrease of almost 6 per cent in the issued capital voted.
One good trend is the movement to online voting, with the amount of issued capital voted via Computershare’s electronic platform increasing by 37.8 per cent in 2014 and 29% of securityholders choosing to vote using the registry’s online channel. Computershare suggests that when an online option is offered, it is preventing a further decline in voting.
The report also covers how many companies received a first or second strike in 2014.
The report can be downloaded here.
Employee share plans
Meanwhile, Computershare has also been analysing the trends and changes related to employee share plans. Selling behaviour indicates that employee plans are generally viewed as long-term investments. However, there will always be a population who want to realise their benefits as soon as they become available.
Salary sacrifice plans are increasing in popularity, particularly where company matching is provided. However, the value of benefits continues to decline in real terms for all-employee plans as the tax exemption and deferral value ceilings remain fixed.
When participants do decide to sell, the vast majority sell all available plan shares. This is influenced by local tax exemption and deferral ceilings for employee share plans being relatively low, and employees seeing plan participation as a long-term investment.
The move to derivative-based plans containing performance vesting conditions has increased in ASX-listed companies since the introduction of the two strikes rule, which focused attention on remuneration frameworks. They are now almost universal. The testing period for these plans is generally set at three years.
The report can be downloaded here.