Investors cautious about online shareholder meetings
Although online streaming technologies have advanced significantly, institutional investors are not yet ready to fully embrace virtual shareholder meetings without reservation, according to the findings of the Institutional Shareholder Services’ (ISS) Governance Principles Survey.
It asked its 602 respondents from across the globe — also from Australia, but largely from the US — to provide their views on the use of remote means of communication for facilitating shareholder participation at general meetings.
Perhaps surprisingly, only 19 per cent of the institutional investors said they would generally consider the practice of holding either ‘virtual-only’ or ‘hybrid’ shareholder meetings to be acceptable, without reservation.
Taking the middle ground, 36 per cent of investor respondents indicated they would find holding ‘hybrid’ shareholder meetings to be acceptable, but not ‘virtual-only’ shareholder meetings. And, eight per cent of the investors did not support either ‘hybrid’ or ‘virtual-only’ meetings.
Among non-investor respondents (mainly consisting of corporate issuers), 42 per cent would accept ‘virtual-only’ or ‘hybrid’ shareholder meetings without reservation.
However, among the majority of non-investor respondents who did not support that view, 22 per cent indicated that, generally, the practice of holding ‘hybrid’ meetings was acceptable, and they would also be comfortable with ‘virtual-only’ meetings if they provided the same shareholder rights as a physical meeting. Meanwhile, 15 per cent did not support the practice of holding either ‘hybrid’ or ‘virtual’ meetings.
Turning to other issues, the ISS survey reveals that more than two-thirds (69 per cent) of investors would consider it problematic if there were no female directors on a public company board.
Of these respondents, 43 per cent believed the absence of women directors could indicate problems in the board recruitment process. In addition, 26 per cent said their concerns might be mitigated if there was a disclosed policy or approach that described the considerations taken into account to increase gender diversity on a board.
Fewer than one in ten (eight per cent) of investors believed that directors were best suited to determine their board composition and that a lack of women directors was not necessarily problematic. And, 23 per cent said they would decide on a case-by-case analysis.
Just over half non-investor respondents answered ‘yes’ when asked if the absence of a single woman director on a board is problematic. However, 19 per cent believed this lack of diversity was a concern given that sitting directors are best suited to determine board composition.
Deciding on share issuances and buybacks
ISS also asked survey respondents to provide their views on share issuances and buybacks, in particular, who should decide on these.
Among the investor respondents, 13 per cent said both were matters for the board to decide on. Conversely, 44 per cent said that both should generally be voted on by shareholders. And, 27 per cent preferred shareholder votes on share issuances, but leaving share buybacks to the board's discretion.
Combining these results, more than seven out of ten of the investor respondents favoured votes on share issuances while less than half of them called for votes on buybacks, says ISS.
Among non-investor respondents, a significant majority (61 per cent) believed both share issuances and buybacks were matters for the board to decide.