There are serious reasons — above and beyond avoiding the optics of avoidance — for CEOs of financial institutions to get back in the AGM arena.

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Kevin Lynch and Paul Deegan

December 19, 2022

In a recent piece, Globe and Mail senior business writer Rita Trichur wrote, “Financial institutions: Do right by your shareholders and meet them face-to-face next year.”

Trichur is right.

It made good sense for banks and insurers to hold online-only annual general meetings during the COVID-19 pandemic, but it makes no sense to continue this practice for the reasons Trichur argues. If banks and insurers don’t buy the accountability argument for large listed issuers, particularly those operating under public charters, they should understand that an in-person annual general meeting is actually in their self-interest. Here’s why:

Leadership by example: These corporations want their employees back in the office, although hybrid work arrangements will be the new norm, as we learn to manage through the pandemic and re-establish normalcy in business, work and society. “Back to the office” and “back to normal” should also mean getting back to shareholders and other stakeholders.

Connecting with stakeholders: While some of the annual general meetings (AGMs) of yesteryear became circuses dominated by gadflies, they were also a forum for serious people to raise serious issues. As former BMO CEO Tony Comper noted in his book Personal Account: 25 Tales About Leadership, Learning, and Legacy from a Lifetime at Bank of Montreal (reviewed by Elliot Lifson for Policy), “When the nuns started to come to BMO’s annual meetings to demand that we stop supporting the apartheid regime by lending them money, that’s when we knew we had to divest from South Africa. Their government was flagrantly flying in the face of any kind of decency or human rights and we, and others, were made to see that we would be complicit in their violation of those rights if we continued to do business in that country.”

Connecting with communities: While the lavish, large-scale AGMs in Toronto or Montreal are from a bygone era, there is great value in taking these meetings on the road. When a bank takes its AGM to a smaller city, it’s a big deal for the community. Done right, these meetings are an opportunity to showcase the company’s contribution to the community and to hear from, and learn more about, the community.

It is important to realize that the meeting itself is just one element of a worthwhile AGM. The roadshow AGM should include a forum for the board of directors and senior management team to engage with local government leaders like such as provincial premier or finance minister and the mayor, as well as local business and community leaders.

This is a model that many prime ministers have successfully employed with regional cabinet retreats. It should showcase a legacy donation to an important institution in the city being visited. For example, BMO donated an important painting by celebrated Newfoundland artist David Blackwood to The Rooms, the provincial art museum in St. John’s, several years ago. The AGM should also provide an in-person forum for reporters to sit down with the CEO and ask questions.

Connecting with customers: Our banks have customers from coast-to-coast-to coast, and many of these customers have deep, decades-long relationships with their local branches. It’s important for the CEO and other leaders to hear from these loyal customers – to learn about their needs and aspirations, and to tailor their offerings to meet these. Validating the trust of these customers can make them active promoters of the institution and a great source of business referrals.

Connecting with the public on important issues: These are challenging, volatile and uncertain times and Canadians are looking for guidance and vision about the future for themselves and their families. Such “thought leadership” is not the monopoly of politicians or social media pundits – business leaders have a podium and a voice. Yet, today, there are not many corporate stand-outs when it comes to speaking out on important public policy issues. Where are the Matthew Barretts, Allan Taylors or Paul Telliers? An annual general meeting is not only a forum for a CEO to highlight a vision for the company, but also a perfect opportunity for them to advance ideas to make our country better.

Developing the CEO’s mettle: During a typical CEO’s run in the corner office, they are going to face a crisis or three. That comes with the job when you run a large, complex organization. When moments like that happen, the CEO needs to be front-and-centre. Canned video presentations and press releases don’t cut it.

An AGM, where questions from the audience can come out of left field, is great training ground for a CEO to learn to be fast on their feet. Preparing for an open session at an AGM also forces the company to challenge itself that it is on the right side of the issues.

Strong management teams should welcome in-person AGMs. Being open to the views of major shareholders over the course of the year, as corporations should, is not a substitute for a face-to-face meeting with shareholders and stakeholders once a year. Engaging with shareholders and other stakeholders in a meaningful, open, and transparent way builds trust, which is the essential currency of banking. As Trichur notes, the Canadian financial sector should be setting a high bar for AGM conduct. It’s time to get back in the arena.

Kevin Lynch is a former Clerk of the Privy Council and vice chair of BMO Financial Group. Paul Deegan is a former public affairs executive at BMO and CN.