Board Members Face Calls for In-Person Meetings by Investors
During the COVID-19 pandemic, virtual Annual General Meetings (AGMs) proved beneficial for many companies. According to an analysis by ISS Governance, two-thirds of DAX-listed companies held their AGMs virtually this year. This trend is set to continue, with an increasing adoption of hybrid AGM formats that combine in-person and virtual participation.
The shift towards hybrid AGMs is driven by several factors. Cost efficiency is a key consideration, as larger companies often find it cheaper to host virtual meetings than renting large halls and catering for shareholders. Smaller companies, however, may find the high costs of recording and transmission technology a barrier to adopting virtual AGMs.
Shareholder sentiment is another important factor. There is growing demand from shareholders for easier access and participation in AGMs. Hybrid formats enable broader shareholder inclusion, improving transparency and engagement without geographic limitations. This matches increased shareholder expectations for accessibility and real-time interaction.
The way executive remuneration is disclosed and voted on during AGMs is closely linked to shareholder participation modes. Hybrid AGMs facilitate real-time voting and clearer communication about performance-related pay, aligning remuneration systems with greater shareholder scrutiny and engagement.
Institutional investors are not convinced by cost arguments for virtual AGMs, as the Annual General Meeting is the most important forum for exercising shareholder rights. Katryna Krueger, Head of German Research at ISS Governance, states that hybrid formats provide flexibility. Commerzbank is a notable exception, as it has held only virtual AGMs for five years but keeps the option to switch back to the virtual format.
According to ISS, remuneration systems have not improved significantly compared to the previous year and have even deteriorated in some cases. Some of the largest German companies have aligned with their US competitors in terms of remuneration. The greatest resistance at AGMs comes from votes on board member remuneration.
Many investors prefer hybrid formats that offer both in-person and virtual participation. Krueger analyzes shareholder meetings for institutional investors and provides voting recommendations. Out of 150 management proposals for a virtual AGM, only three have been rejected by shareholders - Siemens, TUI, and Artnet.
In conclusion, the current trend among German companies listed in the DAX, MDAX, and SDAX indices is an increasing adoption of hybrid AGM formats. This development reflects a strategic balance among cost management, shareholder sentiment, and evolving remuneration systems. German listed companies are increasingly leveraging digital solutions in their AGMs to optimize costs, improve shareholder experience, and align executive remuneration transparency with modern governance standards typical of the DAX, MDAX, and SDAX segments.
- The growing preference for hybrid Annual General Meetings (AGMs) in the DAX, MDAX, and SDAX segments is not only about cost efficiency for larger companies, but also about catering to shareholder demand for easier access and broader inclusion.
- As technology advances, digital solutions such as live streaming and real-time voting, have become integral components in the evolving remuneration systems of German listed companies, fostering greater transparency and shareholder engagement.
