Getting the Board and the CEO ready for the AGM
AGM speeches are not what they were. Volatility almost everywhere and in most sectors; tightened or non-existent credit; reduced or reducing asset valuations; uncertain domestic and international markets; a financial cliff; a probing press; picky customers.
Delivering the AGM speech used to be much more fun. Shares used to increase in value, dividends went up, the champagne was being chilled. Those were the days…
So what needs to go in the AGM speech in 2013?
Shareholders and commentators need to hear evidence that the company and its leaderships fully understands and can articulate its past, present and projected financial performance. Boards will be questioned on growth prospects, costs, debt, capital management, human resources and the general financial future of the company.
The AGM should give comfort, build confidence, indicate direction, demonstrate control and reassure and build stock valuations. The AGM speech, and the Question and Answer sessions that follow, often represent the most important day in the calendar. If the Chief Exec and other Board members perform badly, it can be bad for the company. It is always bad for those who perform badly.
15 Basic Questions for shareholders to ask at the AGM
Most issues should be addressed during the AGM speech, reducing the pressure questions. These are some basic questions or themes for shareholders to ask/raise. Board members need to know their stuff and be prepared.
- Current financial position? Clear, truthful and easily digestible figures.
- Has the Board checked its figures – how was it done, show how it was robust?
- How has the Board minimised/limited/managed possible exchange rate fluctuations?
- Does the Board’s plan for the future need working capital – how will it raise it?
- Has the Board identified under-performing assets, operations or divisions? What are they doing about them? Keep, fix, sell? Strategic importance?
- Inventory levels and annual turnarounds? Comparisons with industry averages/competitors?
- Outline credit management, debt chasing, early warning alarms.
- Recently checked reliability and expected trends of bank guarantees and credit limits. Implications and remedial action? How recent?
- Accuracy of current asset valuations? Remedial action?
- Have last years investment plans been reviewed where/if the financials, liquidity, debt, valuations etc have changed?
- Relationship with bankers/lenders, the media, analysts, rating agencies etc?
- Any scary covenants close to being breached – how are they monitored?
- Debt risk management: explain and demonstrate? Issues arising? Actions taken?
- Review/consolidation/support of supply chain?
- Any planned redundancies? Costs? Sufficient? Measures to retain key staff? New pension legislation – impact and cost implications?
If you have an AGM coming up, I can help you prepare for your AGM speech and for the Q and A session.