The agony and ecstasy of annual meetings

FOR too many years almost the only emotions on show at annual meetings have been anger, frustration and disappointment - from both shareholders and management.

An entire industry, and a fair amount of new law enacted by governments desperately seeking popular approval, have sprung up to support aggressive and defensive corporate governance.

Investor behaviour is a little like the ''Angry Birds'' of the popular mobile phone game - pigs with snouts in the trough have stolen their nest eggs, and they are feral in their revenge.

Their beliefs are bolstered by a popular conviction that all business is run by brigands and opportunists. Let's face it, there are enough executives and directors behaving in a manner to confirm the stereotype.

It is not much helped by the ''two strikes'' law that has left boards in siege mode, when Australia could have opted for something like the far simpler British version of annual re-election of directors - leaving less management time and shareholder money wasted on lobbying, remuneration advisers and courting major institutional holders.

Boards are instead trying to shrink-wrap wishful thinking in logic to argue that the days of the shareholder meeting are numbered that low attendances, electronic voting and webcast meetings mean the formal gabfest should be abandoned.

Such convenient ''truths'' avoid the real problem: that annual meetings for most large companies have become marathon, adversarial, unsatisfying and thoroughly depressing battlegrounds that resolve little and most often leave festering wounds.

Sadly, both sides reflect the aftermath of having been lulled into a false sense of security in the seemingly ''endless summer'' of rising markets and shares in the past decade - more than a fraction of which was inspired by capitalism's triumphant march through the dark corners of communist lands after the 1989 fall of the evil empire.

The brutal truth is that untrammelled capitalism has clay feet, too, and after two decades of reigning supreme it may take the next 20 years to repair - and that will only occur, ironically, if aided by demand from a determinedly communist nation.

Wilful perversion of markets by ''professionals'', aided by an extraordinarily ordinary collection of world leaders, allowed amateur investors to turn off their consciences and logic centres in pursuit of personal gain.

Now everyone is squabbling over what meat is left on the bones, and shareholder meetings of large companies are thoroughly predictable.

Outside, investors run the gauntlet of protesters - employees, unions, environmentalists, anti-gambling advocates, unoccupied occupiers etc.

Inside, they run the gauntlet of security - boards fearing a repeat of the recent spate of pensioner suicide bombings.

Chairmen, against a soothing blue background, make filibuster speeches designed to induce sleep, boredom and comas.

Investors who survive long enough to get to their feet with an opinion will be warmly assured by media-schooled chairmen that they are absolutely correct in raising the issue - and then told they are wrong, but sweetly.

All seem to have forgotten that they are part of a marriage of convenience. Public companies need investors to risk their cash by handing it over to people with the skills, ideas and (hopefully) passion to build something.

If it all comes together, management fulfils visions and ambitions, and investors multiply their money. Like all marriages, it requires commitment to, and appreciation of, partners.

Instead, investing has become more like doctoring - a clinical, dispassionate exercise that is a means to an end. Small investors now mimic the soulless fund managers that dominate share registers, thanks to endless waves of compulsory superannuation cash washing up on their desks.

Boards are strait-jacketed by continuous disclosure, corporate governance statements and byzantine remuneration justifications.

Investors are demanding passion and commitment from their boards and management, but displaying little interest or loyalty beyond a result that increases their bank balances. They howl furiously when, at the whiff of a potential offer at a premium to market, directors do not immediately capitulate.

Go to the annual meeting of a medium-, small-, micro- (or even nano-) sized company, though, and the vibe is usually vastly different.

Shareholders travel kilometres from a CBD, happy to sit in display rooms and show both enthusiasm and passion for their investments. They and their managers engage in discussions about how the company can be built, rather than torn down.

Investors' knowledge of the business is usually high, and the questioning reflects that whether the meeting is for bathroom products companies like Marbletrend or Reece Australia, a security cameras maker like Q Technology, a heavy machinery company like Engenco or one of the myriad exploration companies.

Equally, officials of such companies are not dumb enough to mouth platitudes or management jargon to investors. Quite often they will shake every investor's hand. And the turnouts are not always small: this year there have been 50 people at $2 million companies, and the same number at $2 billion outfits. Size is not everything.

That does not mean the investors in such companies are not critical, or that the managers are not sometimes knaves and fools.

The fundamental difference is that they, usually, have a working relationship and respect for one another.