DAX Annual General Meetings: Corporations are sticking to the online format

Instead of sausages and potato salad, now a virtual snack: the digital general meeting was introduced during the pandemic. Many companies want to stick to it this year – and beyond. But this is met with resistance from shareholders.

Since the first Corona year, things have calmed down around the annual shareholder meetings, where the Management Board and Supervisory Board answer questions from the shareholders. There are hardly any demonstrations in front of the event hall, persistent questions from the hall and lively debates between shareholders and company management at shareholders’ general meetings. Because of the pandemic, companies have often held their general meetings online over the past three years. And the majority of the DAX corporations want to stick with it.

More than half of the 40 largest companies on the German stock market are already planning a purely digital general meeting again this year. This emerges from a survey by the dpa news agency. 22 DAX companies are planning online formats, only ten companies have decided to hold a face-to-face meeting – including BASF, Henkel, Airbus and Porsche. The decision is still pending for seven companies. A company did not provide any information.

Demand for hybrid format

There is a lot of criticism of the purely digital general meeting from shareholders. German shareholders’ protectors see the opportunity for a lively exchange between shareholders and company management at risk and are calling for a hybrid format instead. “The annual general meeting is a very important part of the share culture in Germany,” said Daniela Bergdolt, Vice President of the German Association for the Protection of Securities (DSW). “The lively, critical dialogue between companies and shareholders is best implemented when they are present.”

The possibility of holding an annual general meeting without the physical presence of the shareholders was introduced at the beginning of the corona pandemic. The annual meetings, where thousands of people usually come together to vote on dividend payments, capital increases and the discharge of the board of directors and supervisory board, were allowed to take place online. Last summer, the Bundestag made the special regulation permanently possible with certain changes. The rights of the shareholders should also be fully guaranteed online, for example through a “live” inquiry right.

Planning security, cheaper and less CO2?

According to companies such as Beiersdorf, Merck, BMW, Siemens and Vonovia, which also decided to hold an online general meeting this year, the new format has proven its worth during the Corona period. The DAX corporations see various advantages: You have more planning security, protect the health of those involved, costs, effort and CO2 emissions are saved by traveling and the participation of more and also international shareholders is made possible.

With the annual general meeting online, the sometimes high costs for room rental, catering and staff are eliminated. The healthcare company Fresenius says it has saved around a quarter of the costs with the online format over the past two years compared to previous face-to-face meetings. The materials manufacturer Covestro and the energy company E.ON even expect cost savings of around 50 percent. Other companies put the difference in a six-digit euro amount. However, many also said that lower costs were not a factor in their decision.

Constitutional amendment required

Last summer, the law introducing virtual general meetings of stock corporations came into force. Until August 2023, companies still have the option of holding general meetings online without the consent of the shareholders. After that, however, an amendment to the statutes is required, which can specify the online format for a maximum of five years or authorize the board to hold the meeting online during this period. The shareholders must agree to this amendment to the articles of incorporation.

However, the virtual events must protect certain rights of the shareholders. This includes, among other things, image and sound transmission, the electronic exercise of your voting rights or a “live” right to speak.

Discussion about future format

The proposal to amend the Articles of Association is on the agenda at a number of general meetings this year. The companies are likely to face resistance from shareholders. “Shareholders – both private and institutional – will reject a general authorization for a period of one or two years without specifying the structure of the virtual general meeting and the shareholder rights,” says Marc Tüngler, CEO of DSW. The shareholders then want to know specifically how their rights are structured or, if necessary, restricted in the online format, and demand an open, face-to-face discussion about the future format of the general meeting.

Resistance to change of statutes at Siemens

After the start of the Siemens Energy DAX Annual General Meeting on February 7, the Siemens shareholders’ meeting will follow two days later. One item on the agenda will also be an amendment to the Articles of Association, which authorizes the Management Board to hold the Annual General Meetings virtually for two years. The employee shareholder association “Wir für Siemens” rejects this and has already announced that it will vote against it. And the fund companies Union Investment and Deka Investments will also vote against a corresponding item on the agenda. The “Wirtschaftswoche” had reported.

“We are not fundamentally against the virtual general meeting – if the general conditions justify it or make it necessary,” said DSW Vice President Bergdolt. “But now that Corona is no longer forcing us into virtual space, Siemens should take the opportunity to face the shareholders personally.” Precisely because Siemens looks back on 175 years of company history, which was also characterized by a good relationship with the shareholders.