The drive-thru Estonian shareholder meetings

Tallinna Kaubamaja aktsionäride koosolekul osalesid teiste seas suuromanikud nõukogu esimees Jüri Käo (vasakul) ja nõukogu liige Enn Kunila.

PHOTO: Peeter Langovits

«Let’s keep it quick and constructive,» were the opening remarks to shareholder’s general meeting by Katre Kõvask, CEO of ice-cream-maker Premia Foods. Quick and constructive (at times overly so) were almost all general meetings by listed companies this year where Postimees paid a visit. 

At Premia Foods, the official part lasted mere 25 minutes, brushing through four items on the agenda: in addition to the usual confirmation of last year financial report, decision on profit distribution and electing the auditor, the issue of settling own shares acquisition and repurchase programme was also decided. Rare was the meeting that went for over an hour; usually, 45 minutes did the trick.

True: official part of Premia Foods’ meeting was followed by the so-called open mike session where no minutes were taken of questions by shareholders. The questions and answers really were in free format.

Thus, the company’s chairman Indrek Kasela taught shareholders how to find and look at quarterly results presentations. While company quarterly and yearly reports tend to be difficult for the uninitiated to read and understand, Premia Foods does present an easier and clearer version at the exchange website.  

Official report by Katre Kõvask on last year financial results only lasted for 6 minutes or so. This was the shortest meeting we were able to follow. One of the deepest presentations, lasting for a whopping 35 minutes, was given at the Baltika meeting by CEO Meelis Milder.

«The final result, for the year, was not according to expectations and posed a disappointment,» said Mr Milder and went on to thoroughly explain why things went not as expected. Baltika did get a small profit last year, but the money flows were not sufficient and the designer clothes maker/seller had to ask for extra shareholder money again.

Short speeches

Short and laconic speeches by managers are a characteristic setting our general meetings apart from the large ones in the West where reports on financial results are detailed and respectful towards shareholders. One CEO and majority owner was showing signs of slight impatience as shareholders desired to discuss the company and its future.

«We can talk about that at the coffee table,» he repeatedly said during the meeting which lasted less than 45 minutes. The other feature specific to us is the very small numbers of participants at general meetings. Tallink, for instance, has over 11,000 shareholders; of these, mere 75 showed up at general meeting. Ekspress Group shareholders are over 3,000, but, according to Äripäev, only 11 attended.

Let’s compare that to Nokia. As at end of last year, it had 225,587 shareholders. At the extraordinary general meeting last November, where sales of the mobile unit to Microsoft was approved, about 5,000 were present.

Crowds always abound at investment guru Warren Buffett led holding corporation Berkshire Hathaway general meetings. This year, they were over 30,000. All in all, the company has over half a million shareholders.

Truth be told, the Berkshire Hathaway meetings are no ordinary ones. This being a conglomerate of companies – a portfolio – the event always happening over the first week-end of May is like an exhibition of enterprises, a festival quite dominated by entertainment.

When it came to small shareholder activism, Tallinna Vesi general meeting stood out. A shareholder was troubled by the company changing his water-meter every year.

«Makes no sense to change it yearly,» suggested the shareholder. Questions were also asked regarding excessive fluctuations with pollution charges, and the interest exchange transaction.

Few show up

But the numbers at our shareholder meetings are clearly too low. On the average, it’s the two dozen shareholders. Meanwhile, general meetings are the only place where small shareholders have the right to put point blank questions straight to Enn Pant, Armin Karu or Toomas Annus; or grab them by the shirt sleeve after the meeting and download their worries, or delights regarding progress of the company.

The single exception here was Harju Elekter, the meeting of which featured a hundred or so shareholders; considering overall numbers – about 1,500 – that’s quite a lot.

A peculiarity at global giants and our little listed companies is that, at the meetings, votes usually go the way the executive management and council have proposed. Quite often, however, some shareholders pose alternatives – which usually fall flat. 

Thus, at the meetings of the world’s largest listed fuel company Exxon Mobil, representatives of the Rockefeller have for years proposed that the chairman and CEO post be separated – so far, to no avail.

The roots of Exxon Mobil, as well as of several large US oil company, go back to Standard Oil established by John D. Rockefeller; his descendants hold a couple of percent of Exxon Mobil’s shares.

Things don’t always run smooth at our listed company meetings either. For instance, these may get cancelled as the quorum is not reached. Occasionally, the voting goes not according to plan.

Such was the case with Arco Vara general meeting where the board’s desire to hold a €3.5m issue – previously approved by council – was rejected. The no-voters were council member Arvo Nõges and AS Baltplast officially owned by Mari Tool. The meeting ended in war of words between Arvo Nõges and CEO Tarmo Sild.

Immediately, Mr Sild let it be known that a new general meeting would be called, and that’s the way it went. At the new extraordinary meeting, the shares issue got votes enough. Even so, the proposal to eject Toomas Tool and Arvo Nõges from the council failed for lack of support.

A minor discord also happened at the Harju Elekter meeting. Namely, a council member Madis Talgre stepped down, explaining that this was because he had failed to make council pay bigger dividends to shareholders.

The Harju Elekter general meeting decided to pay €1.74m in dividends i.e. 33.7 percent of last year’s net profit. In earlier years, the dividends have exceeded 40 percent; in 2009, a whopping 70 percent was handed out.

Also, Mr Talgre was discontented with the company owning overly much PKC Group (Finland) shares.