Z Energy’s Corporate Governance Officer, Debra Blackett, argues that the AGM has had its day

On July 2 Z Energy held its annual general meeting at Te Papa. It was a beautiful sunny day, and it had been a big year for the company and its shareholders. Just one month earlier, Z had announced settlement of the purchase of Caltex New Zealand, significantly increasing the scale of the business and increasing the share price from $5.10 to $6.20 - creating nearly half a billion dollars of shareholder value overnight.

In the circumstances, Z anticipated high shareholder interest and set up for significant participation and attendance at the AGM, choosing a large venue with good car parking on major public transport routes and even getting the weather right.

Alongside the physical AGM, for the first time Z also ran a virtual online meeting so that shareholders could participate, vote and ask questions in real time via laptop, tablet, mobile phone as well as in person. The technology was flawless. All seven of the independent directors were present, including four who were up for election by shareholders.

However, in the event, a grand total of 19 shareholders attended in person and voted at the meeting and nine shareholders attended and voted online, together representing 0.038 per cent of total shares on issue.


This is not unique to Z. Poor and declining turnout at AGMs is now the norm. In 1986, arguably the AGM's heyday, Brierley Investments Limited held an AGM which coincided with their 25th anniversary. Several thousand investors attended and were served crayfish and distinguished wines.

Roll on to 2016 and Z's 19 investors were offered lamingtons, sausage rolls and Z barista coffee, prepared and served by Z site staff.

Given the poor turnout, Z heavily over-catered and the lamingtons and sausage rolls were mostly eaten by the late night crew who unpacked the venue. It is fair to say that the AGM's heyday is over.

So why? In Z's view, it is not the lack of crayfish and decent wine that is killing the AGM, but rather the advent of continuous disclosure requirements and the step change in the relationship between issuers and their investors, which now includes the ease and immediacy of an investor centre on the company's website and an active social media presence.

Consistent with this explanation, all of the information at Z's AGM had been previously disclosed to the market, in line with continuous disclosure obligations and Z's commitment to market transparency. Similarly, all of the resolutions had been voted on in advance and overwhelmingly passed (including a modest increase to directors' remuneration).

While Z understands the principle of the AGM as an opportunity for shareholders to meet face-to-face with directors, the reality is that for a business that is performing in line with or ahead of shareholder expectations, and is open and transparent with its investors, that opportunity is now largely symbolic.

Z is committed to a generous and open relationship with all of its shareholders.

Two of Z's organisational values are to 'be straight up' and to 'share everything', values Z seeks to bring alive in how it communicates with the market and its shareholders. Z has a comprehensive investor centre on its website, complete with all governance documents and direct contact details for the investor relations manager (who answers his phone and responds to all communications).

The CEO and CFO frequently take calls and respond to emails from both institutional and retail investors. Z also has one of New Zealand's top 10 Facebook sites, with more than 250,000 followers engaging with the company on a wide range of issues - both positive and otherwise.

Above all, Z has a commitment to transparency and accessibility with the media and the market which means that investors engage all year around rather than waiting for the AGM.

AGM's are expensive, inconsistent with commitment to environmental sustainability, time consuming and - now - of little interest to shareholders.


A current example is Z's practice of issuing monthly market updates on how the Caltex and Z businesses are being integrated, a commitment Z has made over and above any formal disclosure requirements.

Z acknowledges there are times when the opportunity to meet with directors face-to-face may be a valuable opportunity for some shareholders. However, absent any evidence of such a demand, Z considers that the physical AGM has lost its relevance for the vast majority of its shareholders. Z believes the way forward is now a virtual AGM, which is the path it is planning to take in 2017.

Z is taking this somewhat innovative approach to ensure it spends its resources wisely and delivers something that is relevant and of value to the shareholders who do want to participate.

Z believes the way forward is now a virtual AGM, which is the path it is planning to take in 2017.


In the meantime, Z will continue to focus on meeting its commitment to openness and transparency for all shareholders, through the way it consistently communicates with the market. If any shareholder wants to ring Z at any time, to discuss anything at all, Z's commitment is that it will answer, and that it will answer promptly.

Z has held shareholder briefings in the regions and commits to continuing with that practice on a more regular basis. Z hopes that shareholders who want to talk directly to Z come to those and can discuss a wider range of issues than are normally covered by a formal AGM.

AGM's are expensive, inconsistent with commitment to environmental sustainability, time consuming and - now - of little interest to shareholders.

In Z's view, the vast majority of Z's shareholders have voted with their feet and would prefer that resources currently committed to the AGM should be committed to continuing to improve shareholder returns.