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Company Annual General Meetings (AGMs)
With mass gatherings discouraged or banned in many parts of the world, in-person company AGMs will largely no longer be possible. We have been speaking with companies about their contingency plans, with options including delaying or postponing the meeting, moving to a hybrid (part physical, part virtual) AGM, or where permitted, a virtual online-only AGM.
We have already seen multiple AGMs cancelled in Finland and postponed in Germany, with further announcement pending in the coming days and weeks. This also means that dividend payments and capital raising authorities which require AGM approval will be delayed.
There are legal challenges in some jurisdictions to these changes, such as in France where companies are obliged to offer the option of in-person attendance; some governments have already waived this obligation. Some individual company by-laws may also make certain options difficult. Guidance is starting to emerge, such as a UK joint publication based on advice from law firm Slaughter & May setting out the legal position for companies1.
Executive pay
Many companies will miss short-term and long-term incentive plan targets given the market and economic conditions. This will have significant implications for pay awards granted to executives.
We recognise that pre-AGM engagement on this topic may not be a priority for many companies, but our team remains available for guidance or questions. We would encourage investee companies to consider the following:
- Shareholders will not generally look favourably on executives receiving generous bonuses following a year where shareholders have lost out, even though the impacts of the virus are outside of companies’ control.
- We recognise that remuneration committees may make adjustments to schemes to permit rewards to executives who demonstrate exceptional skill in navigating their company through the difficult period ahead. We will pay close attention to individual company circumstances, including whether companies are consistent in their treatment of staff and executives. For example, if companies make it difficult for their workers to self-quarantine, we would look extremely unfavourably on any attempts to compensate executives for their lost bonuses.
- For companies seeing an exceptional increase in demand for their services as a consequence of the virus and of related government measures, we generally expect remuneration committees to treat this as a windfall effect and be prepared to adjust pay downwards if appropriate.
Capital Allocation
One of the central pillars of corporate governance is capital allocation, and where companies decide to focus their funding. Over recent years we have seen companies using increasing amounts of cash to re-purchase stock rather than investing in their businesses or bolstering up their balance sheets. In the S&P 500, 50% of all free cash flow is now used to re-purchase stock.
At a time when balance sheets are under immense pressure and companies face significant unexpected costs, including how they dedicate resources to ensuring the welfare of their staff, management should review the appropriateness of their share buyback programmes both at this time and in the longer term.
To access our full report on the early implications of COVID-19 on the ESG agenda.

Risk Disclaimer
The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

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