Treating myself to a well-earned day off work yesterday, I decided to take the opportunity to attend my first corporate Annual General Meeting.
Nominee Accounts
Up to this point I had never been entirely confident that I could do this, because I hold my shares electronically through a nominee account. The benefits of this are that it both makes “trading” cheaper and faster, and also that I don’t need to worry about guarding or losing paper certificates. The worry is that the company, of which I am a part owner, does not actually know that I exist because all that they see on their shareholder register is the name of my broker (TD Waterhouse)!
Anyway, to keep TD Waterhouse honest and test out the system to my own satisfaction, I thought that it might be a good idea to see if I could go along to an AGM. I chose AstraZeneca because it is one of my favourite holdings: it was one of the first shares I bought directly, it taught me how to be patient (years of an empty pipeline before its recent re-invigoration), and it provided an interesting primer on the M&A process (last year’s preying mantis episode). Finally, the AGM was in central London (Lancaster Gate) and on a Friday, which were both appealing factors.
The Preamble
Before entering the hall, shareholders gathered in a foyer, where we could avail of tea, coffee and biscuits. The biscuits were chocolate chip and one disgruntled curmudgeon beside me grumbled that, in years gone by, Astra used to provide lunch.
The meeting attendees were largely, shall I say, of a certain age. I was one of the youngest there, despite being no better than nearly young myself. It strikes me that there must be worse things to do than amble along to a few AGMs a year, when you are retired.
TD Waterhouse
Organising my ticket was much more straightforward than I had expected; I am registered with TD Waterhouse to receive all manner of corporate notices and actions and they email me the details of all of my various holdings’ AGM plans. I rang them up and asked them to put my name down for AstraZeneca. Two days later I received a letter of nomination or certification (or something) stating my number of shares. I simply presented this at the AGM and–lo and behold–was granted admission.
After some tea and biscuits and one false start (I initially walked straight into the hotel kitchen before the conference hall entrance), I went in and took my seat in the second row where I could look directly into the whites of the Chairman’s eyes and try to communicate visually my disappointment at his total refusal to even remotely engage with Pfizer last year.
The Meeting
The meeting lasted 90 minutes–the length of a good film. It was highly structured, opening with a few words from the Chairman (the charismatic Leif Johansson), followed by a spiel from the extremely rapid speaking and vaguely sinister-looking French Chief Executive Pascal Soriot. I was shocked by the amount of lip service paid to sustainability. You would think that curing cancer was a footnote, compared to the goal of hitting various renewable and sustainability targets.
The brief speeches were followed by a very entertaining question and answer session (see below) and then a rattling through of the meeting’s main business (votes authorising Directors to buy back, get pay increases etc.)
The Q&A
This was unquestionably the main entertainment of the day. The tone was one of extreme deference and old-school formality on the part of shareholders’ to directors “esteemed… distinguished” etc. I am sure, to anyone reading this who has been to AGMs in the past, this sort of thing is nothing new, but to a first timer, it was quite interesting. In addition, most of the questions were somewhat bizarre. Here are some selected highlights:
- A very pompous questioner representing a Dutch bank (AZN or ANZ?) and 600,000 private clients (gee!) asked an unbelievably long-winded serious of questions requesting that Astra disclose all payments to healthcare officials everywhere, amongst various other commitments well above and beyond legal requirements. He appeared to want disclosure of everything imaginable, short of our esteemed Chairman’s colour of boxer shorts.
- Somebody representing Christian Aid sought assurances about Astra’s keenness to pay the maximum tax rates in its various countries of operation.
- A renewable campaigner, after a lengthy speech explaining the importance of renewable energy, urged the Board to ensure Astra used only renewable energies in its various locations.
- A Welsh man (he slipped in a few phrases) asked whether Astra had a chaplain and suggested that science can only get you so far, relative to the Big Man. Leif agreed that the matter was certainly worthy of consideration.
- A Chinese shareholder suggested three potential bolt-on acquisitions that the Board might like to consider. These included GW Pharma and Indivior. Presumably, like me, he received a stub holding of Indivior last year after their spin-off from Reckitt B. I applauded heartily at the good sense apparent in his suggestion.
- A nice-looking man suggested that, although Astra already pays the “living wage” to all of its directly employed staff, it should consider using contract companies that do the same.
It was surprising to me how none of these shareholders seemed remotely interested in how the company was managing its current operations or in its plans for future growth.
There were two better questions:
- One elderly Indian shareholder, after drily noting the “lousy” quality of the tea and biscuits, observed that the Report’s description of “progressive” for the dividend, was stretching a point considering it hadn’t been increased in three years. Leif explained that he considered “progressive” to mean stable, not just increasing. I suspect he would have been in a small minority on that one. Personally, I would rather they paid no dividend if the earnings retained were to be deployed wisely, but I am sure that were I retired my priorities would (and will be) very different.
- Another shareholder stood up and, after curtly beginning with “[Name], small shareholder, no speeches” asked a question about the high proportion of total assets accounted for by goodwill and intangibles. He went on to query the numbers and inquire as to whether the accounts had been fully audited. The CFO appeared bewildered by the concept of a high proportion of goodwill and intangibles and looked horrified at the second suggestion.
I enjoyed my day and will try to attend more of these in future, although I would guess that there might be a few more fireworks at the forthcoming Alliance Trust meeting!
Disclosure: Long AZN
Disclaimer: This post is not a recommendation to either buy or sell. Please consult your investment advisor.