Proposed changes to members' voting entitlements in Board elections and AGMs

Friday, 19 Oct 2018

At the 2018 APRA and AMCOS Annual General Meetings to be held on 21 November, members will be asked to vote on a special resolution that relates to their voting entitlements at future AGMs and Board Elections.

Click here to read about the 2018 Board Elections, and read more about the proposed changes below.

What is the current situation?

Currently, the Constitution provides that every APRA or AMCOS member who has received any earnings at all over the previous two financial years is entitled to cast one vote in the relevant company’s Board elections and AGM.  Members are then allocated one additional vote for every $500 “block” of earnings they have received over the last financial year.

So by way of example, currently an APRA member who received $5,000 in APRA earnings during the year ended 30 June 2018, will be allocated 11 votes to exercise in this year’s APRA Board elections and AGM (one vote for being an “earning member” plus 10 additional votes for the $5,000 in earnings they received).

What change is being proposed?

The APRA and AMCOS Boards and Management are proposing to change the current voting entitlement arrangements so that rather than allocating members an additional vote for every $500 “block” of earnings, an additional vote will only be allocated for every $2,500 “block” of earnings received by the member in the previous financial year.

So in the future, if a member were to receive $5,000 in earnings during the previous financial year, the proposal is that they will be only be allocated 3 votes to exercise in that year’s Board elections and AGM (one vote for being an “earning member” plus 2 additional votes for the $5,000 in earnings they received).

Why make the change?

Members voting entitlements have been weighted on the basis of their earnings since the existing $500 “block” of earnings required for an additional vote was first introduced into the APRA Constitution back 1968 and the AMCOS Constitution in 1979.  Given the amount of time that has passed since this principle was first introduced, the APRA and AMCOS Boards felt it was time to review the amount required for each additional vote.

In addition, it was made clear to the APRA Board and Management at last year’s AGM that many lower earning members strongly believed that the existing $500 “extra vote threshold” had created a “vote value” shift that favoured high earning members at the expense of the great number of APRA members who earn less than $500 in APRA earnings each year. APRA and AMCOS have always prided themselves on taking into account member concerns and feedback and the proposed change is an attempt to address the concerns raised in a sensible and proportionate manner.

The APRA and AMCOS Boards hope that the change will encourage more members (particularly members with lower annual earnings) to participate in the Board election and AGM process in the knowledge that in the future their single vote will carry up to five times more weight (comparative to higher earning members) than it used to.

Why increase the “extra vote threshold” to $2,500 and not some other amount?

The APRA Board considered a number of different valuation metrics in coming up with the proposed new threshold of $2,500 in earnings for each additional vote.  The methodology that the Board settled on as the fairest approach was to look at the average earnings per APRA member over the period from 1994 (the earliest year we have reliable data) to 2017.  This approach takes into account both the significant increase in APRA Net Distributable revenue over the period but equally the extraordinary growth in the number of APRA members during that time.  The result of this analysis was that the average annual earnings per member between 1994 and 2017 was $2,421, which the Board decided to round up to $2,500.

However, the Board acknowledged that setting any amount as the “extra vote threshold” was not a perfect science and accordingly the amount should be reviewed again in another three years to ensure the new threshold was still relevant in the future market conditions. The AMCOS Board agreed with the APRA Board’s approach and took the view that a consistent approach to member voting entitlements across both companies was imperative.

Is there a cap on the number of votes any single member can receive?

Yes, for APRA, any single writer member’s voting entitlement is capped at 15% of the total votes allocated to the writer members and any single publisher member’s voting entitlement is capped at 15% of the total votes allocated to the writer members. It is also important to remember that for APRA, only writer members are entitled to vote in the elections for Writer Directors on the APRA Board and only publisher members are entitled to vote in the elections for Publisher Directors on the APRA Board.

For AMCOS, each member’s voting entitlement is also capped at 15% of the total votes allocated to all AMCOS members.

What will the change mean for me in practice?

The change will have the greatest impact on members who earn less than $2,500 in earnings per annum.  For example, a member who earns $2,400 in a financial year currently receives 5 votes (one vote for being an earning member and 4 votes for each additional “$500 block”) whereas in the future that member would only receive 1 vote.

Conversely, a member who receives $25 in earnings in the previous financial year will still only receive 1 vote – but they now have the same voting entitlement as any other member who receives up to $2,500 in earnings that year.  In this sense the change will have a significant democratising effect.

As between members who currently earn over $2,500 in earnings per annum, the change will have little relative effect because the proportionate reduction in votes for this “high earning” category of member will be the same for all members in that category.

Why are voting entitlements weighted by earnings at all – why is it not one member one vote?

Weighting members’ voting entitlements on the basis of a member’s earnings is standard practice in copyright collecting societies around Australia and internationally.  It is also consistent with the vast majority of companies around the world where shareholders with a greater shareholding in the company receive a corresponding greater voting entitlement when it comes to the Board’s elections and AGMs.

Another way of looking at it is that it is not unreasonable for members with a greater financial stake in APRA or AMCOS to have a greater say in how those companies are governed and managed. Higher earning members are contributing significantly more to operating costs by way of commission than lower earning members and so it is fair enough that they should have more say in how their contribution to the collective is being utilised.

Need more information?

Writers please contact our Writer Services team on 1800 642 634 or email writer@apra.com.au

Publishers please contact our Publisher Relations team on (02) 9935 7900 or email publisherapp@apra.com.au


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