FIONA BALZER | Australian Shareholders' Association

It's the last episode of the year and always a pleasure to catch up with Fiona Balzer the Policy and Advocacy manager for the Australian Shareholders' Association. ASA is led by a dedicated team of volunteer company monitors who advocate and advise for the retail investor community. They meet with company chairs and directors to discuss issues pivotal to the interests of retail shareholders.

Here are some of the topics covered in this episode:

Safety: Some industrial companies experienced deaths amongst their workforce - mining companies have found to keep workers safe they almost have to brutal in their disclosure. Also, abuse of retail staff is something companies are having to expect and to have processes around to provide a safe working environment.

AGM Format: There was still a number of physical only AGMs rather than hybrid meetings, which the ASA prefers as they facilitate live interaction and immediate response. We also have seen not all companies are providing complete access to the full AGM recordings – when including Q&A is often the meat of the meeting.

Decarbonisation Efforts: Many entities are publicly discussing their advances towards decarbonisation goals, an area where we anticipate the International Sustainability Standards Board sustainability and environmental disclosure regulation will provide standardised ESG reporting in future years.

CSL held an excellent hybrid AGM (though they almost got a strike – shareholders weren’t happy with high pay in the face of the recent share price performance).

Qualitas (ASX:QAL) (Funds management and direct lending on commercial real estate) had 100% vote in favour of director election and a few other resolutions – never seen that before!

Disappointment that CBA ran a physical only AGM with a webcast thus denying the shareholders the opportunity to particpate wherever they are. Some companies take hybrid meetings in their stride.

A few companies ran physical meetings with ability to listen in by phone, Metcash and Harvey Norman come to mind – the latter had poor audio and we don’t expect a replay to be made available so if you missed what was being said, too bad!

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Boardroom Battles: The Art of Corporate Spills

Chloe: Shares for beginners. Phil Muscatello and Finpods are authorised reps of money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Fiona: But it's really • • • important, I think, rather than doing the blame game to actually try and figure out how it is, you can get the best outcome possible using the levers you have. And the remuneration is one of those levers and reporting to your shareholders, because shareholders really like it if their companies make them feel proud of being a part owner. I own shares of that. It's contributing to society, as well as contributing to my superannuation or wealth hopes in the future.

2023 was the year of the good, the bad and the ugly on Australian share market

Phil: G'day and welcome back to shares for beginners. I'm Phil Muscatello. 2023 was the year of the good, the bad, the difficult and the ugly on the australian share market. Joining me for a look back over some of the companies monitored by the Australian Shareholders association is Fiona Balzer, the policy and advocacy manager. G'day, Fiona.

Fiona: G'day, Phil.

Phil: Thanks very much for coming back in. It's great to have you live in the studio.

Fiona: Yeah, love to come.

Phil: And we were just talking so much interesting stuff before we hit record, so hopefully we can recapture that magic.

ASX shareholders associations have identified a number of themes this year

It's been another interesting year. They're all always interesting years, though, aren't they? On the ASX, are there any overarching themes that stood out for you that you've identified?

Fiona: Yeah, ASA australian shareholders associations, we've seen a number of themes emerge. Just one comment, though, on know we have good years and we have bad years. If the market's going well and everybody feels secure in their income, things are a lot more sanguine and everything tends to go well. Rising tide lifts all the boats, I think, as now we've got the cost of living worries and whether you, can get a mortgage, whether your house goes up, you start worrying more about will I ever be able to retire? And people are much more critical about what the company is doing. And where they're going.

Phil: But it's also been a year where in terms of share price, not in terms of governance, the share prices have been up, they've been down, they've been up and they've been down. And then it's kind of like over the year it's been flat really, basically, but it's just been very hard to hold your nerve.

Fiona: I think this year, I think too, we're a bit more in a risk off market. We have risk on markets, we have risk off markets and the likes of. And I'll talk about CSL's AGM a little bit later. They were often priced for perfection. And we're going through a period where it's like that is such a high pe. Not really sure I'm confident. Oh look, there's a drug that's going to lower the need for one of their kidney products. Oh dear. I'm just going to push the price down. So the price has been up to 360, I think, in the last two years, and now it's got a two in front of it instead. And yet that ozempic drug like now people have started to die on it. People have suddenly reflected, hey, drugs don't work like that. They don't universally solve every problem immediately. And so the price is bumping off the bottom. But we're still feeling that people are pricing all the good in and they're not willing to pay up for all the good. But people are trying to, I think, flip between the good and the bad. So we're seeing tech stocks bounce around as well.

Companies often update you on their first quarter ahead of AGM season

And with the AGM season, one of the things we see is companies update you on their first quarter. it's also a good time to talk to your shareholders about strategy.

Phil: So when you say they update you on the first quarter, is it the first quarter of this current financial year or the previous financial.

Fiona: Okay, so sometimes people don't tweak to the fact that if you have a year, end of 30 June, you have to give all your results out in August. By end of August, got five months to hold your AGM. Hm. So by the time you get to the AGM M, you've already seen the trading for up to the end of September. And so that's the quarter we mean that July, August, September, some companies in.

Phil: The current financial, financial AGM is being held.

Fiona: Yeah. So the companies will give you an update on how that's gone, but also may amend their guidance if they gave guidance in August as well. How we thought things were looking three months ago. Now we actually have three months of figures that have all come into the center and all been added up. So that's the first quarter that we talk of. And that's why share prices often jump around at the AGM. It's not so much that you didn't like the cut of the chairs jib. It can be that the guidance has even been either been modified or just doesn't have that confidence behind it in the way the company's talked about it. So that will drive the share price. And what we're really seeing now is the previous years we've had companies talking about supply chain and difficulty getting product in or even capital expenditure. Can you get all the builders and the like? Whereas now we're really seeing cost of living effects on the retail consumer, of whatever product it is, and the impact of inflation and how is the company going to react to that slightly changed dynamic?

There have been some safety issues in a number of companies recently

Phil: So another thing that I've noticed, and we talked with Rachel, the CEO, about this, is that there have been some safety issues in a number of companies and people have been killed and injured in workplaces. What have you been seeing in this industrial space?

Fiona: Yeah, that's been, I think a new feature. We don't often see deaths in industrial companies and one of them was Woolworths. So a big retailer, it's not what you would expect, but they had a cleaner who was crushed by a piece of equipment. That all has investigations to go, so I have no insight to the actual detail. But in the mining companies where people were dying at unacceptable, ah, rates over the past ten years, they have really managed to reduce that by being really blunt. Got really blunt, people have died, safety is crucial. We don't get a second go around. So by being really open about that and impacting the remuneration of your executives, like basically if somebody dies on your watch, whether or not you're found to be at fault, obviously fault is a bigger issue, but it can be that you have your remuneration cut pending the investigation to make sure that there was absolutely no way of working around that person having that incident. And it can be down to what policies you have and processes. It can be how you force people to apply those policies and processes, even though they might be inconvenient, could be your shift, the way you manage shift, all those things. The company has to take it really seriously because everybody should come home from work as they left to go there in that morning or afternoon. So we have seen that and the likes of woolworths were punished a bit for the proxy advisors, for example, not thinking that they had taken enough steps to put on hold the remuneration. Although typically in the mining stocks, it is about a 10% or 20% impact beyond what is often built into the framework. So we'll often see that any incidences do have a 20% impact. If you have a death that gets wiped. But then companies quite often will go well, needs to be more significant than that. So we'll take money from other things that you've done well, we'll just take another 10%. But it's really important, I think, rather than doing the blame game to actually try and figure out how it is, you can get the best outcome possible using the levers you have. And the remuneration is one of those levers and reporting to your shareholders, because shareholders really like it if their companies make them feel proud of being a part owner. I own shares of that. It's contributing to society, as well as contributing to my superannuation or wealth hopes in the future. So talking about it is really important as well, which is why we highlight it.

Did shareholder pressure force management to take more care for workers

Phil: So the, dynamic behind that, that forced management to take more care for their workers, did that come from shareholder pressure, or was it internally driven?

Fiona: I think I'd have to say all of the above. It would be the people representing the workers, the law firms, the executives, the directors, saying, I do not feel good about the person who has to tell someone that they're not going home. So I think it's everyone. But the shareholders are being quite clear that you have a remuneration framework, which helps you drive the culture of your business and set up what people are worrying about, because it can be some of these safety concerns. It can be that you have to almost step back and say, well, I can't see how I contributed to the problem, but is there anything we can all do to make this not happen, to make it better? And that thing about safety where sometimes safety equipment slows things down. And a company is saying, but you need to meet your quota. And this is. I'm, thinking of incidents of decades gone by, but you have to meet your quota. You can't meet your quota because you feel like the safety equipment is slowing you down. You remove the safety equipment, what you want the company to realize is they were the ones pushing for the quota. They have to figure a better productivity measure, because it has to be, you have to meet your quota, but you remove the safety equipment. We don't care what your quota is. You're not getting a reward on that. So it's mindset bringing that mindset and culture in, which is what your framework can do, because you might feel like. But hang on, I didn't even know that person or that district. Like, well, you need to watch out for your fellow workers. So all about culture, everybody has a part to play. And shareholders, as we've seen with remuneration and other things, if they do put their attention to it in a public way that the company can't resolve from you do get changed.

Phil: And wasn't that a situation, I think, was it with endeavor? Is that where one of the deaths occurred and the remuneration report was seen to be still too generous, considering someone died?

Fiona: Yes. And that one's a tricky one as well. It's a, whole of community issue, as far as I know. There is that additional difficulty that the investigation is not final. And this is where the mining companies do better. They say, well, it's no fault us, when we say we're reducing by this amount, we're not saying it's fault, so you can go and do a proper investigation. What we're saying is, until we've got this fault all figured out, everything's on hold. we saw that in Covid, where people reduce their remuneration, that sometimes you lose money, not because it's your fault, but because it's the right thing to do, to wait, to have patience, to say, let's see what happens next. Other people are doing it tough, obviously, the families are doing it tough. You just have to take some pain for the period until it's all worked out what happened, where the fault was, could you have done it better? And the big thing is coming out of that is figure out how it doesn't happen again.

ASA is concerned about physical only agms rather than hybrid meetings

Phil: Okay, so I know that one of the things that grinds the gears of the shareholders association is agms, and whether they should be know the combination hybrid live. there was a number of physical only agms rather than hybrid meetings, which the ASA doesn't look on favorably, to put it lightly.

Fiona: Brickbats to all the companies that do that, it is very sad. And what is really amazing is that sometimes our largest companies, so Commonwealth Bank, I know, didn't do a, hybrid, and yet CSL, who, when we were engaging with them after the COVID where we all did virtual, so they'd never done a virtual before, whereas australian shareholders, we've done five or six. When we were talking with them, they were like, oh, but it's like running two meetings at once. So you only do an AGM once a year can be that. Your directors and your whole work, all the force that goes into making the AGM, they've got a particular way of doing it that works well for them. They feel it goes well. CSL's like, oh, that'd be like running two meetings. But this year they cracked their first hybrid and we were so pleased. And then we're just so disappointed about, CBA. And it's a big company. All these other companies manage to run their hybrids. You have to look it up, to ensure it's a hybrid, because they're so casual. Of course we're having a hybrid. Like, what else would you do? And they run it really well. CBA is still a laggard in that regard, and it does mean that not everybody can participate. So they held their meeting in, I think theirs was in Melbourne as well. I could have it wrong because so many agms, 145, like, they all merge at this. They all blur when you're managing the people who are attending the meetings, but it just is so difficult if you've got mobility issues. We've had volunteers who've ended up with COVID and they're not sick, so they're like, oh, I can nextel. For example, our monitor was actually flying in from Queensland on his personal dime because he has shares in it and he's like, day before, got Covid, no flight, but attended online. It's just, you'd expect a data center, of course, to go hybrid meeting just makes it so much easier. And actually, as you say, ASA's business is agms. When we went through Covid, we were one of the few companies, businesses that could go to ASIC and say, we've been to a couple of hundred virtual meetings. We can not only tell you what the general average experience is, but specific experiences where these ones were really good and these ones were not good. So just having that experience means, I think we're better placed to talk about the agms and just enabling that participation is so important. Those meetings can get quite vexed, I think. Qantas. She talked to Rachel about Qantas before she represented us. That one went on for a long time. It was a, hybrid meeting. It just means that people can participate wherever they are. The other negative we see is some of the physical meetings with webcasts. They don't all eat audio casts like Metcash and Harvey Norman. You can listen on the phone. Some of the audio is really poor, so that makes it really difficult if your audio is poor, to listen and then they don't put a replay up. So you can't even think, oh, do not know what that person was saying, but I'll figure it out later when I listen to the audio. So it really does inhibit the participation of shareholders that if you weren't at the meeting physically, you've only got half a clue as to what went on and you can't make your own judgments about how the company's presenting.

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Companies will have to report on environmental and social elements of their company

Fiona: M.

Phil: So in terms of decarbonisation and generally ESG, it sounds like there's more standardization coming into this because there hasn't been standards up until this point. You know, you can sort of label something ESG and it's not necessarily very esG.

Fiona: this is a good topic to talk about. It's been a long time coming, in part because the standard setters are taking it really seriously. We've had people, companies reporting on environmental and social elements of their company for decades. Historically, some of the large, really? Yes. Way back, when I was at Westpac Investment Management, which is where Regnon, which is a company that specializes in this area, evolved. That's where it dated from. It used to be that we saw good management as management that looked to the future and looking to the future was looking at what type of rules you might have, what emissions controls you might have, rather than companies going, that's the business of politicians. We'll figure it out. When they give us a law. Companies are often best placed to provide information that helps make those laws. So, yeah, decades there's been rules. The large fund managers, I think it was the Commonwealth Superannuation fund, CSS, MPSF public Service, I think that was, they wanted to have sustainable companies because they had 50 year, liabilities. So they would go to the company and say, please fill in this questionnaire. And then the next institution that was interested give someone at the company a different questionnaire. So they'd be asking for information that they felt they needed to make decisions. And I remember going to one company and they're like, we've got 200 of these things and they're all different. We don't actually run fat in our staffing to do this. We don't have 30 people that can just go and figure out what their answer is to your specific question. So the idea of the international standards is to determine what one figure is that will suit everybody and make it easy for the companies to comply. And they are launching in the middle of next year, effectively, and in Australia, we are going to bring them in in what they call a stage manner. The biggest companies will have to report. They start the year next July. And so it'll be fy 25 when they have to report. And then the smaller companies have a couple of years more and even smaller, a couple of years more to report against what those measures are, which initially are predominantly on the environmental side and the decarbonization side, but will also include social. And we are now getting, I think, nature biodiversity standards, and they will roll in behind. But there's a lot of thought going into how this is done. So with the nature, standards, it's thought we don't want to get people distracted from properly implementing the first international sustainability standards. We need to fold them in behind. And the hope is that everyone will learn from the big companies as well. You'll have experts who are able to give you assurance that the numbers aren't being made up. You'll have ways of delivering the information as effectively and efficiently and consistently and reliably as possible. So everybody will be working together to get good outcomes, and then they can feed into investment decisions and potentially other decisions as well. So, yeah, watch this space.

The accounting standards boards will have their purview expanded to include sustainability standards

Phil: Okay, so let's have a look at the specifics. How many companies did you cover? Not you personally, but you and the volunteers.

Fiona: Me and my 120 volunteers.

Phil: Your minions.

Fiona: Oh, do not call them minions. I think I'm their minion. They, attended 145 agms since the beginning of September. So these are the 30 June balancing companies. And we have eight more companies to go in December. But they're not 30 June. There's like 31 July or December. So the banks and the chemical companies are coming up. And so, yeah, that'll be over 150 for that.

Phil: So we haven't got time to go through everything.

Endeavour had major shareholder wanting a new director added to the board

But what are the highlights of the low lights? Who were the baddest of the worst?

Fiona: the agms that stick most in my mind were ones you've probably discussed earlier. But the likes of Endeavour, where we had the major shareholder wanting a new director added to the board. And these are always interesting companies to evaluate because just before we go on.

Phil: This is, alcohol and gambling, basically, we're talking about with Endeavour, aren't we?

Fiona: Yeah. Endeavor's vice, pubs and booze. And their largest shareholder comes out of that business and merged his business with the Woolworths business. And Bill Wavish was a Woolworths executive and he felt that the Matheson investment person driving that felt that Wavish would be a good addition because he's really unhappy with how endeavor is going. The likes of Endeavor are running into increased taxes, increased concern about problem gambling, and they figuring out how to navigate that environment because there are a lot of investors who wouldn't invest in the space because of the gambling and the drinking. Then there are a bunch of people that are happy to invest in the space if there's minimum harm, which way do you go? And Matheson's thought was that Bill Wavish would be great. He'd been at Woolworths at the start of the investment and the like. But for us, when we were interviewing Bill wavish, so we decided how we could vote for him or against him. One of our issues was that he'd been a director at Dick Smith. And you may or may not recall that Dick Smith came onto the market. Bill Wavish actually left before it went broke. But it did go broke sort of within the following year, full 1112 months after he left. But he'd been part of the float team. And the thing about a listed company and a board is they need to be set up that no matter who goes, the company is, an ongoing entity. It needs to persist after you've been there. And while I do hear Bill's comment was that I wasn't there when it went bad, but still he was there in the lead up to it going bad. And for us, that calls into question whether we'd want him to be, at Endeavour. And so that one was interesting. Just because the struggle, like, do you follow one camp or the other? Asa would get proxies from all sorts of people with all sorts of interests. So we had some people that think Bill Wavish could walk on water, and we had other people that are still smarting from losing their Dick Smith holdings funds. So trying to navigate that and interview and figure out what's best for the company because of the peculiar nature of a board where they work as you want them to be, collegiate, but challenging. And if you have a wholly disruptive force in the boardroom, then that can just make everybody's efforts worthless. How do you balance that? Because you don't want them overly collegiate. As the company dwindles. You want them to be challenging, preparing for the future, making the business sustainable. And sometimes there can be big questions, like, do they adopt the new rules early because that's the right thing to do? And for them to have a ten year business model, it is good to go early. Or do you milk it as long as you can? So, yeah, that was one of the challenging meetings. In the end, Bill wavish did not get appointed. So we are probably waiting to see whether the Mathesons call an EGM an extraordinary general meeting and try and topple the current chair, which is where all their ire is now focused. So that was one interesting meeting. Another one was the Qantas meeting, which went on for a very long time. And I think we're still in a holding pattern. And what comes after. So they got a large strike, remuneration strike, which is where everybody basically takes out their frustration that their CEO was paid so much as he exit. Well, over the 15 years he was there.

Phil: And as selling those shares before he exited as well.

Fiona: And then there's the question over that. That's one. We're not wanting to sound too sanguine, but I don't think that's all completed yet. We've got the ACCC case about them selling tickets that didn't exist effectively. There's a lot of cases to be worked through. There's, still money on the table from Joyce, that CEO. I think. I think it was eight to 10 million. Again, a lot of money. Then there are the questions about the sale of those shares when the ACCC case, they should have been aware of it. Like, should that he have been precluded from selling? And I think that almost needs everything else to work its way out for the rights and wrongs of that. And again, a, company, I think, and their executives sometimes have to have patience. So I understand it was all to do with financing properties because we're asked at the time about the sale before we knew anything else, and share price sort of really was harmed after that, making him wait, perhaps even allowing him to take a loan again, the thing was to buy a property. There were other ways of getting that money which could have been maybe you change your rules, like he can't because he's leaving, can take a loan out against holding half the value against all the shares or something like that. There are other things. Patience, I think will be shown to have been the best way forward. And, I think there's a lot to come on that one as well. Just how does it wrap up? What is the final accounting on that? Are there any findings that will come against different individuals? And that's the hardest thing about the market is because if you just leave all your shares in the bottom drawer and wait for things to come through, you're probably going to lose your money. At sometimes you have to say, with what I know now, do I sell or have that unknown there? And I just take into account it in my mental assessment of the risk. But this sort of thing has to work through the court, cases have to work through. Then people can find out exactly who knew what, when and how impactful it was and do the maths. But that is often a frustrating place to be because that behavior is like the legal minimum, whereas we want the best practice. So I would counsel patients in that sort of situation like, hm, this looks pretty picky. Perhaps we should do something else rather than allow this sale right this moment.

Phil: we'll get back to the show right after this brief message.

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Companies often reach out to find feedback prior to an AGM

So top marks in the class went to qualitas. Who are qualitas? Qal, funds management and direct lending on commercial real estate.

Fiona: Yeah, they're a company that reached out to our victorian company monitors and asked for an assessment.

Phil: So do you find this is something that happens often with companies that they do reach out to find feedback prior to the AGM or just to what are they doing? They're just looking for are they doing the right thing?

Fiona: Yeah, we find that a lot of companies are interested in what is happening for their retail shareholders and that's where the Australian Shareholders association is kind of unique because not many people attend agMs. So if somebody wants to know what retail shareholders are thinking, they will say okay, we need to pay attention, maybe we'll do a function. But also let's check in with the Australian Shareholders association, invite the company monitor to come and talk to us about what's happening and if they've got any concerns. So I see that as a positive from the company. Well it sounds preemptive and mature. And the other thing about retail shareholders is they are just such a broad church. So one of the things we do try and do is rather than say, hey, they all look like this and they all have this opinion, we'll be saying, well on the one hand we have a lot of people who are supportive of this, but we also have complainants. So we can kind of help a company understand that there's going to be different views and they can't meet everybody's demands. But hopefully the general behavior is good and one of the things we'd encourage is them to disclose. So you might not please everybody with your nil dividend plan because you want to be a growth stock. And maybe you think in the future you might list elsewhere like the US where dividends aren't really a thing. But if you're doing that you need to be really clear. So there's two parts of this relationship. You figure out what you are, you tell people what that you are and then the shareholders can go, well that doesn't fit with my interest. There's another 1900 companies and I'll look elsewhere or they'll say yeah, this really works for me, that's what I'm after. So yeah, we have a lot of people reach out but we have trouble meeting all the requests and we trying to figure out better ways to do that. So qualitas was one in the end we didn't have any proxies but we didn't advertise the engagement. But one of the things I loved about their results is I had never seen 100% support for a director election before. So their two directors were elected with 100% votes, and sometimes that's a rounding error. But this was actually nil nil votes against 100%. Four. So they are obviously doing a lot of things right. Even though have to bring it back to share price. Even though the share price has sort of dabbled around the. It's sort of midway between. So it's not like it's shooting the lights out in ten bagger, but it's still going, it's engaging, it's reaching out. I'll give them a bouquet for that one. The ASA bouquet.

Phil: As opposed to the brickbacks for other.

Fiona: Companies that we're not holding a hybrid meeting. Yeah, that's right.

Cromwell says shareholders should vote against directors if they're unhappy

Phil: Why are you happy not to talk about strikes?

Fiona: One of the issues with remuneration reporting is it's just so complex. And that means that you almost have to obsess with the detail, like, how much are people getting? What happens here? And what we really want is the directors to have said how much is too much. We understand at the moment that they're worried about poaching from other employers, because in that level of the market, mining companies approaching each other's staff with senior amps, ceos X, A and Z, although I understand they were happy because they had someone who, basically, you might have four people running for the top role and you want them to continue to grow. So it's not like, oh, my God, you shouldn't approach that person. But yet we have all that poaching. We want that overarching use of the framework to build a good culture and good business. But the nitty gritty detail is sometimes really important to figure out how that works and if it makes sense. And that means that sometimes when we write our voting intention reports, there's just so much on remuneration and people are a bit like, I'm happy or I'm sad. They don't want that much detail. They get sick of the obsession of the remuneration strikes. So this year we've got 18 strikes, which is more than we had for the entire year last year for ASA monitored companies. So it's a bit of a harsher year. So here I am talking about it now.

Phil: But even so, if you go through to the second strike and then there's a board spill, that can be a problem as well, because suddenly that is really leaving things all up in the air. It's like throwing all your balls up in the air and starting again.

Fiona: Yes, indeed. And was interested NRW, holdings code, NWH ASX code. It had a second strike, but it had like a 95% against vote on the spill. Because, as you say, it's a bit like 52 card pickup. You just start again the practicalities of that spill meeting. If a company is egregiously abusing their powers, I think that institutional shareholders and ourselves, we would be happy to vote directors out. One of the things with those spill meetings, though, is you have the spill meeting at the AGM, and then the company has, I think it's 90 days, maybe it's 60. They have a period to hold the next the spill meeting where you get to vote. I think that if you're really unhappy, you should vote against the directors at the actual meeting. So don't wait for, the off chance of a spill. If you've frustrated, you vote against the directors who are up for election now. And admittedly, most companies, that'll be a third of the directors. But that also focuses the mind, because you almost need the board to work to build its replacement. You know, Qantas is a good example of how that played out, where we basically, up to the sale of Joyce's holdings, things were okay. Then it was negative news. Negative news, which really built up to the AGM a month before chairs saying, oh, no, I'm not going to go. Really need the board to say, hey, we're responsible for this being a renewing entity. Usually the chair has to promise to go, and that's up to him. You keep the pressure on, and it's verbal pressure, it's media pressure. So none of this voting stuff had he said he wasn't up for a vote as well. So you would vote against the people at the meeting, and then if you wanted the chair to go, you would actually start using your powers to call a meeting or to add them to the next AGM rather than a spill. Because the analogy about throwing things in the air and just picking them up is really good, because if everybody's spilled, companies have to have three directors, so whoever's got the least worst votes form the board, and then they get to appoint the new people. And in the period up to the spill, they've been trying to manage the spill. So I think that distracts them from running the company. So for that reason, it's very unlikely anyone uses a spill except as, like, a Trojan horse where they've already got 50, they might have a large holding. They want to get rid of the board, put in their own people, so they hold the spill meeting. And, I think Cromwell property is an example of that, where in between egms and spills and the like, they restructured the entire board, but they had an idea of where they wanted to take that.

You can go to Fiona and the shareholders association to hand over your proxy

Phil: Okay, listeners, so, you know, this is leading up to giving proxies to the shareholders association. So don't throw away your proxy. When you get the email saying, you know, there's going to be an AGM and you've got a proxy and you've got a vote, you don't have to do all this hard work and think about it. You can go to Fiona and the shareholders association to hand over your proxy.

Fiona: And I'd also say that if you do know how you want to vote, directed proxies, like when you give a proxy to the ASA, we can't change the directed proxies, so we'll get some that are for and some that are against. They actually get counted as that. But what that does, if it's, under australian shareholders, is gives the company an idea that this holding is like a retail smaller shareholding. And I know that the Coca Cola scheme meeting, they had a small number against votes. They came to us and asked why. And we've had surveys where our people basically look like the whole population of shareholders. So we can usually then engage and find out why. You're not voting for a scheme meeting.

Phil: It's even for a small number of votes that can be taken into account.

Fiona: By companies because it's very hard to.

Phil: Know where they're coming from.

Fiona: To know where they're coming from. And also, retail shareholders don't like it when those firms ring up and say, how are you going to vote at this meeting? So they feel pressured, so you don't necessarily have access. You could say, how are you going to vote? And if you say no on the phone, they could say, oh, why? Because they want to understand. But people in their shareholding role feel uncomfortable with that. Whereas if you go to the association, we're much more sanguine about saying, there are a number of people that feel like good companies are being taken off the market and they had wanted that as part of their portfolio, and they basically peeved with this timing decision being taken away from them. So we can synthesize that. So that's why I always say it's not just if you don't know how you want to vote or can't be bothered reading the document, if you do know you can direct it. and then that might give us additional information. So some of them will have, 95% will be open. So our voting intention determines the vote, and other ones will have 15% against or 15% for. And it's not necessarily the contentious ones where that crops up either, because when they're contentious, there usually is a broad opinion, and our people have the same broad opinions. But there are other, oddities where they really take a set against a director because of the way they're conducting themselves in that company, another, or really supportive of an executive, or really supportive of pay or really against it. All that adds to the information that both we have and the company has.

Phil: Fiona, thanks very much for joining me today.

Fiona: Lovely to talk with you, Phil, and Merry Christmas. Merry Christmas to you, too.

Chloe: Thanks for listening to shares for beginners. You can find more sharesforbeginners.com if you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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