The real voice of management have seen by Online AGM

Please allow my strange English... because it is produced with Google translation. (Please do not laugh ;) my Japanese is also strange... ) The original article is?here.

One month has passed since the June AGM season was over. Let's look back on this year's AGMs. Thanks to the increase in online AGMs, there are more opportunities actually to see them than before. How the CEO and directors answer questions from shareholders is an important source for understanding the company.

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The attitude of directors to questions from shareholders

Most online AGMs offer a system that allows shareholders only to watch live. In other words, shareholders cannot input questions online nither give a vote in real-time after listening to the explanation. Even so, more and more companies are preparing another system that accepts questions in advance. But when I watched the AGM after submitting the questions, there were many cases where the company disappointed me by selecting only few typical questions and answering them. I would like to know what questions were asked by other shareholders, even if they were off the mark. This is because we can see the attitude of the company/directors if they are not choosing only the questions that are convenient for them.

Toyota shows all questions registered so far by accessing the dedicated site for entering questions. If you find a similar question, you can "like" it. It is clear what questions are being asked and which are popular and should be answered. By the time I accessed it, many questions had already been registered, and some of the questions had collected a lot of "like"s, so I gave up that it would be difficult to get noticed no matter what I registered from now on. If you want the company to pick your question up next year, you must register it right after receiving the convocation notice.

Even if AGM is held online, sometimes I can not participate because it is overlap with other companies. But there aren't many companies that will release the video later. JAL was one of the few companies that published the archive on HP at a later date. However, the section Q&A with shareholders was cut, and it was only in the business report part. This is very disappointing. Some companies published the QA summary without publishing the video. These seem to take into account the privacy of shareholders. However, everyone has the right to hear the answers of the directors. For example, even if the question part is replaced with narration, I would like the management's answer to be disclosed.

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Shareholders' expectations appear on their question

The basic question at the AGM is from individual investors. Individuals have less interest conflict, and questions sometimes become more severe than institutional investors.

Z Holdings offers a so-called "participatory" system where shareholders who connect online can exercise their voting rights and ask shareholder questions on the same system every year. And questions are also active, such as "Why raise executive compensation even though the stock price is falling?", "Director's XX is weak when looking at the skill matrix of directors", "Is it possible the Audit and Supervisory Committee can keep an appropriate distance from management?", and what to do about a specific business in the future.... Especially question about the management compensation is strict. When one shareholder asked, "Do you want to raise only management compensation without raising shareholder returns?" the management replied, "Growth is important, so please understand that we will not raise shareholder returns."

At Hitachi's AGM, the company selected only three questions from the questions received in advance. Following the answer, questions from the shareholders who visited the venue began. A question with a strong impression was, "I was working at a Hitachi partner company, and I had a lot of work and broke my health and got a disability. I am currently in trial with your company."?It seems that there was a response that was perceived as unfaithful, and the shareholders calmly and flatly questioned the company's attitude. The CEO responded that they are now verifying how they work and will respond in good faith to the trial. On the other hand, "The revised Elderly Employment Law has been enforced. Although it is a company that leads the country and has SDGs that is with one of its goals is" eliminating poverty ", it suddenly becomes very lower the salary at 60 year old. Besides, Hitachi doesn't hire all people from the age of 65, is it OK as this global leading company's attitude?" One of the shareholders asked. But Company simply answered, "we continue to do in a current way"

At Mitsubishi Chemical's AGM, some shareholders squeezed their voices on the policy of cutting off the petrochemical sector. "Mitsubishi Rayon, I feel sad to cut off the business that was continued for long. I want to hear the CEO's thoughts again." "The Mitsubishi Group has been running this business for the country. Is it really okay to quit petrochemicals?" They are shareholders, but at the same time, it is the voice of a former employee. After positively accepting any question as "the good point", the CEO politely explained this question, "Still, Japan has to decarbonize now; petrochemistry is now overcapacity. We have to go carbon-neutral. "

Sumitomo Corporation's AGM also tried to respond until the shareholders were satisfied, and it took more than two hours. Shareholder questions were harsh, poor business performance,?the method of selecting directors (pursuing the absence of mid-career hires as executive officers), and the fact that executive compensation seems to be increasing despite poor business performance. On the other hand, there were questions such as, "Can Sendai's biomass facility really reduce carbon?", And the management was trying hard to explain why it is effective.

Shareholders hear CEO Mr Son's one-hour presentation every year at Softbank's AGM. After that, he answers each question taking for a long time. He seems to enjoy the dialogue with shareholders. After all, it took 2 hours and 41 minutes this year. Many of them were complaining about business performance and dividends, but Mr Son was positive and said,?"We can get back soon if one or two investee companies become big!" But shareholders haven't been quiet. "How many years do we need to wait? even if you said that we need to have long-term eyes?"?To this, Mr Son said, "It's severe opinion. Maybe you can't tell it face-to-face with me? (you can write such a severe opinion because online)." .. On the other hand, a shareholder who participated in person said at the beginning of the question, "I have Softbank for 21 years." When Mr Son heard that, became a happy face and said, "Wow ...?you didn't have any moment to lose trust against us??Even one of our board members is saying that he sometimes hesitates to trust for?(our future growth)..." Another board member said from behind," I'm always !!.. ", And the venue was filled with laughter.

At Sony's AGM, some new businesses took the attention of shareholders. A shareholder questioned the partnership with Honda. He said, "Cars are different from games. Both Tesla and Hyundai are in an accident. When there is a big recall or a lawsuit, which will be at the forefront, Honda or Sony? By the way, I asked the same question at Honda's AGM. Honda said that it was a difficult question. " Another shareholder mentioned about drone and said, "I saw it received high praise at the Makuhari exhibition the other day. Please do your best." There was also a question about how to respond to climate change risks, and the CEO enthusiastically answered.

The explanation of Mitsubishi Heavy Industries (MHI) was almost all "carbon neutral". MHI said that it is their social mission. However, the attending shareholders' question was about the Korean comfort woman issue in WW2. "The victims have not received the money. Why don't you pay for them?" The company replied that it was a problem settled in the Japan-Korea Government Agreement and the decision of the Korean Supreme Court was regrettable. Several questions were something that should be asked to the government, not MHI, such as "When I'm looking at the problems in Ukraine, I thought, should we(Japan) put more effort into defence research and development?" or "What should we(Japan) do with space development?".

Regarding climate change, some questions were asked, such as whether wind power generation was sold a few years ago but demand is increasing now, and what to do about renewable energy in the future…

Takeda Pharmaceutical. The CEO emphasized that "operating profit reached 1 trillion yen for the first time in Takeda's history", but shareholders were strict and asked such as?"what to do with such debt even though interest rates are rising soon", "will you still be motivated to M & A?", " there is a lot of depreciation of R&D, is it OK? " The last shareholder to raise his hand was a former employee (after retirement) in R&D departments. "I'm glad to hear that the CEO's presentation is about working on nucleic acid medicine. Around 2000, I regretted lagging behind with antibody medicine. Nucleic acid is important in fields where rivals are making big venture investments".

CEO Mr Webber opened his arms and said, "I'm very happy that you are still thinking about our research!!" The director in charge of R&D bowed and said, "Please continue to watch over us."

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Future AGM

How should companies respond to online AGM in the future? COVID-19 will be solved someday. However, online AGM also leads to reductions in the venue and other costs. If companies want more shareholders to participate online as much as possible, they need to devise ways not to put online participants at a disadvantage. If management narrows down the questions in advance, shareholders will think they must go to the venue. The online AGM and its transparency should also benefit companies. It will allow more people to hear and understand their company. Even if there is a difficult shareholder question, if the company responds properly, it will improve understanding. If the AGM video is made public, shareholder questions may be polite.

Above all, the online AGM can be a place to widely convey the management's voice. The important thing is to answer the questions of individual shareholders on the spot in your own words without any scenario. Individual shareholders are by no means all amateurs. It includes important stakeholders such as former employees, business partners, local residents and customers. And in some cases, they hold much longer than institutional investors. Answering these shareholders and disseminating the answers widely will increase the understanding of the company. And pondering each question and request will surely help improve the company's future value.