This article originally appeared in the NZ Herald.

There was a strong response to last week’s column about company communications with a clear majority supporting the argument that individual shareholders have drawn the short straw in New Zealand.

Most readers endorsed the view that company communications are more orientated towards big investors, that senior executives place a much higher priority on face-to-face meetings with fund managers, and big investors are first in line for attractive equity offerings.

The investor relations divisions of Fletcher Building and Z Energy were quick to respond with emails on Monday. Fletcher Building argued that individual shareholders could listen to last week’s live teleconferences even though this post-profit downgrade teleconference was “for institutional investors, fund managers and analysts”.

The company revealed that “we actually had 14 lines accessed by people representing private investors”, a tiny proportion of its 39,500 shareholders.

The main point is that individual shareholders were not specifically invited and, if they had been, there would have been far more than 14 on the line for such an important briefing.

Fletcher Building also admitted that its February post-result teleconference recording was not in “a very prominent place so I sympathise with you not being able to find it easily”.

A long 825-word email was received from Z Energy but it didn’t specifically address most of the issues raised in last week’s column. Z Energy has excellent communications but it is digging a deep hole for itself as far as its annual meetings are concerned.

There is a middle ground between Z Energy’s resolve to replace its traditional annual meetings – held in expensive locations with few attendees – with webinar meetings only. This issue is covered in more detail later in the column.

Meanwhile, the accompanying table summarises an analysis of the time and day of the week of the latest annual meetings of the 50 largest NZX companies.

The first point to note is that only one annual meeting was held on a Monday while 12 were held on a Tuesday and on a Wednesday, 15 on a Thursday and 10 on a Friday.

The morning was the most popular time with 29 meeting held before noon while four were held during lunch time and 17 in the afternoon.

Morning is the ideal time because shareholders prefer to avoid the school and post-work rush hours.

Auckland had the most annual meetings with 30 followed by Christchurch with eight, Wellington five and Tauranga two. Whangarei (Ryman Healthcare), Darfield (Fonterra) and Taradale (PGG Wrightson) had one each. A2 Milk and Xero both held their annual meetings in Sydney where attendances are usually higher for growth-orientated companies.

The most popular Auckland venue was the Ellerslie Events Centre with seven meetings last year, followed by Pullman Hotel with five and Vodafone Events Centre, Eden Park and Alexandra Park with two each. Ellerslie Events Centre used to host a clear majority of Auckland meetings but its facilities are tired and in need of refurbishment.

Rydges was the most popular Christchurch venue with two meetings and Te Papa in Wellington, also with two.

Annual meeting attendances are declining even though attendance numbers at Warren Buffett’s Berkshire Hathaway annual meeting have soared from just 12 attendees in 1981, to 24,000 in 2006 and 40,000 in 2015. The Omaha meeting attracts investors from all over the world, including New Zealand.

Computershare’s March 2016 Intelligence Report on Australian company annual meetings paints a fairly gloomy picture. It shows that meeting attendances decreased by 25 per cent between 2005 and 2015 with only 0.158 per cent of Australian shareholders attending meetings in the latter year.

Computershare noted that: “One of our clients spent close to $1 million on their 2015 AGM. With approximately 200,000 investors this averages at $5 per investor. However, only 100 investors, or 0.05 per cent, attended the AGM, driving the cost to $9,500 per investor.”

Computershare’s April 2016 Intelligence Report on New Zealand company annual meetings shows that 1.7 per cent of security holders attended annual meetings in this country compared with only 0.158 per cent in Australia. In other words, one in every 59 New Zealand shareholders attends company meetings compared with only one in every 633 shareholders in Australia.

However, it is important to note that a higher percentage of small company shareholders turn up to meetings and New Zealand has a relatively higher proportion of small listed companies compared with Australia.

Computershare reports that the overall New Zealand shareholder attendance ratio was 1.7 per cent in 2015 but only 0.7 per cent of S&P/NZX 50 Index company shareholders attended compared with an impressive 2.3 per cent for non-NZX 50 Index companies.

Z Energy has decided to abolish its physical annual meeting after only 19 shareholders attended its 2016 annual meeting at Te Papa in Wellington. Last week’s column argued that the poor attendance was strongly influenced by the 2pm Friday start time when Wellington was experiencing a cold mid-winter day.

The capital city’s maximum temperature that day was a brisk 11C and 37km/h southerly was blowing just before the 2pm meeting start.

Seven of the nine paragraphs in this week’s email from Z Energy were self-congratulatory. The company argued that it places “a very high importance on how it communicates”, it has “the second strongest corporate reputation in New Zealand, according to Colmar Brunton” and the company “has one of the top 10 corporate Facebook accounts in New Zealand with 300,000 followers”.

The email went on to note that last week Z Energy’s “CEO Mike Bennetts hosted a live Facebook discussion where questions were not moderated but came directly from the public and could be seen live on the screen, in real time”.

In addition, Z Energy’s chief governance officer noted that 550 individual investors registered to attend six investor presentations in Auckland, Wellington, Tauranga, Dunedin, Christchurch and Hawke’s Bay in mid-March. Why were these meetings held just two weeks before the company’s March 31 balance date and why haven’t the presentations and notes of these meetings been made available to all investors through the stock exchange?

The problem with Z Energy is that it has a very narrow view of the annual meeting debate. It believes that this meeting should be either physical or webinar (an interactive webcast format).

Z Energy’s narrow approach is reflected by the following comments: “We do think virtual ASMs (annual shareholder meetings) are the way of the future. We think they represent better use of shareholder funds and address a new reality – increasing willingness to participate and engage online and reduced willingness to travel to a venue for a meeting in the age of continuous disclosure.”

By contrast, the Shareholders’ Association supports the hybrid approach, a combination of a physical meeting with a webinar facility.

As all directors will be present for a webinar meeting Z Energy could easily hold these meeting in its board room or canteen with 19 seats available for shareholders who wished to attend in person.

These attendees could be provided with tea, coffee and plain biscuits and the cost of these meetings would be far less than last year’s over-catered Te Papa gathering.

However, Z Energy may have to provide seating for more than 19 shareholders if it holds this year’s meeting at a more convenient time than 2pm on a Friday.


Brian Gaynor

Head of Investments

Disclosure of interest: Milford Funds Ltd holds shares in shares in Z Energy and Fletcher Building on behalf of clients.

Disclaimer: This article originally appeared in the NZ Herald and is intended to provide general information only. It does not take into account your investment needs or personal circumstances and so should not be viewed as investment or financial advice. If you require financial advice we recommend that you speak to an Authorised Financial Adviser.