Listed company: AGM as a means of generating commitment amongst shareholders?

January 27, 2022

What if the general meeting provided a way to experience a sense of ownership, whether you were on the spot or on the other side of the globe?

The Corona period has been exceptional in the governance of listed companies. It has not been possible to hold general meetings in the traditional way and many investors have not had their typical spring event experience. At least for small investors, the opportunity to feel ownership of the company in which they invest their assets becomes important. This requires listed companies to take an active role in implementing the operating models and tools that will enable closer interaction between the ownership community and the company's top management at the Annual General Meeting.

In practice, new ways of telling stories about the company are needed so that investors see the company as attractive. This is the first condition for feelings of ownership. There is also a need for ways in which investors can deepen their understanding of issues vital to the company. Such as the opportunity to ask questions directly from management. Voting is also needed to make shareholders feel they have a voice.

For companies themselves, measures to strengthen the ownership experience of investors are not just a way to compete in the stock market. They can also be an important channel for obtaining information and input from the shareholder community. Well designed, they can be a way to harness the collective intellectual capacity of shareholders to support the company’s management and board.

In the post-pandemic period, it is worthwhile for the legal departments of listed companies to work closely with those responsible for investor relations. And the top management should encourage this cooperation. It is risky if the owners are not activated. First, the energy of investors can be channeled into frustration on social media discussion boards. The share of small investors is significant in many companies, and at worst, they move their funds to where, in addition to a suitable outlook, there is also a promise of satisfaction of the psychological and social needs associated with ownership. One can therefore imagine what will happen in this case to the demand for the company's shares and thereby to executive compensations.

Real-time and experiential ownership will become more and more appealing in the next few years. The younger generation in particular is hardly content with less. Therefore, listed companies should invest in the annual meeting as an event. It is worth choosing a partner who handles the general meetings with professionalism and who is able to support the strengthening of the ownership experience at the general meeting on site and remotely.

Are you interested? Contact us to talk about how your company can seize this opportunity - already this spring!

Prof. Iiro Jussila
Co-author of Psychological Ownership and the Organizational Context
– finalist for the AOM George R. Terry Book Award 2012