New research reveals that young investors are more likely to vote at an annual general meeting (AGM) than their older counterparts.
So, why are young investors seemingly more engaged than older groups? And what else does the research reveal? Let’s take a look.
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What is an AGM?
An AGM is an annual general meeting of interested shareholders in a particular company. The meetings are typically used to discuss the performance and strategy of the company in front of senior executives.
AGMs can be important for shareholders as they present an opportunity to vote on important decisions. Such decisions can often directly impact the company concerned and/or its employees. For example, it is not uncommon for shareholders to vote on board appointees or the levels of remuneration awarded to senior management.
Importantly, taking part in a vote at an AGM is not something that is reserved for major shareholders. Individual investors, with only a couple of shares, can also have their voices heard at these meetings.
What did the research reveal about young investors?
According to research by Tulipshare, 34% of young investors (aged 16 to 24) typically vote at the AGMs of the companies they invest in. This compares to just 15% of investors aged over 55.
Tulipshare suggests this is an interesting trend given that it’s the opposite of what typically happens when it comes to politics. During the last UK General Election in December 2019, young people had the lowest voter turnout. Meanwhile, older people made up the majority of voters.
It’s suggested that the reason why young investors may be more inclined to vote at shareholder AGMs is that this group believes that influencing corporate governance is an important step in delivering wider societal changes such as climate change matters.
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What else does the research reveal?
In addition to highlighting how young investors are likely to vote at a corporate AGM, Tulipshare’s research also suggests that, more generally, many people lack an understanding of shareholder rights. That’s because its research reveals that 60% of respondents are ‘unaware’ that investors are allowed to vote on how a company is run.
The research also shows that AGM votes carried out by individual investors only account for 28% of their actual voting power from mid-April to mid-June 2020. This period is also known as ‘proxy season’, and it’s the time when most companies hold their AGMs.
Interestingly, the research also reveals that less than a quarter of investors ‘always’ use their voting right at an AGM.
The reason behind this voting apathy could be down to the popularity of passive investing. This investing style typically involves investors investing in a number of companies, perhaps through an exchange-traded fund. As a result, it could be concluded that many passive investors simply don’t have the appetite to align their personal values with each and every company they have a stake in.
How can investors vote at an AGM?
The act of voting at an AGM can differ across companies. In general, however, investors are permitted to vote in person at an AGM. Alternatively, they can vote online or through a third-party proxy.
To vote in person at the AGM, investors are often provided with an electronic device to cast their vote. Such devices can sometimes also be used to submit questions.
If joining an AGM remotely, investors typically need to submit their vote in advance, usually via an online form. Alternatively, investors may also be allowed to cast their votes by post.
Are you looking to invest? If you want your voice to be heard at an AGM, you’ll need to own shares in a particular company. If this appeals, take a look at The Motley Fool’s top-rated share dealing accounts.
