The Shareholder Forum

supporting investor interests in long term enterprise value

 

Purpose & History of Services

The Shareholder Forum

The Shareholder Forum supports investor interests in corporate enterprise value with services that require independence – and that may benefit from the Forum’s network resources and recognition for advocacy of long term investor interests – to assure a definition of relevant issues and fair access to information that can be relied upon by both corporate and investor decision-makers.

The policies that provide a foundation for the Forum’s marketplace functions have been carefully developed and tested to allow any investor to participate in its communications, either anonymously or visibly, without acting in concert. Established originally to accommodate professional fund managers, this independent moderator function has proved to be consistently effective in managing orderly processes of issue definition for rational analysis by fiduciaries who are responsible for informed decisions.

Initiated in 1999 by the New York Society of Security Analysts with lead investor and former corporate investment banker Gary Lutin as guest chairman to address the professional interests of its members, and independently supported by Mr. Lutin since 2001, Forum programs have achieved wide recognition for their effective definition of important issues and orderly exchange of the information and views needed to resolve them. The Forum's ability to convene all key decision-making constituencies and influence leaders has been applied to subjects ranging from corporate control contests to the establishment of consensus marketplace standards for fair disclosure, and has been relied upon by virtually every major U.S. fund manager and the many other investors who have participated in programs that addressed their interests.

Currently important applications of the Forum’s independent position include the support of corporate managers who wish to provide the leadership expected of them by responding to activist challenges with orderly reviews of issues relevant to long term investor interests.

Requests for Shareholder Forum consideration of support may be initiated confidentially by any investor or by the subject company, or by the professional advisors to either.

 

The article below was published in Agenda, a Financial Times private subscription service for corporate directors, and is presented with permission.

Note: Intel Corporation is a Leadership Supporter of the current Shareholder Forum's "Say on Pay" program addressing investor communication issues, and is represented on that Program Panel by Cary Klafter, referred to below as the company's executive officer responsible for relevant policies.

 

Agenda, January 25, 2010 article

 

 
The week's news from other boardrooms

 

 

 

 

 

Article published on January 25, 2010
By Kristin Gribben

 

Companies are experimenting with holding their annual shareholder meetings entirely online, but the movement is attracting backlash from activist investors who say eliminating the in-person annual meeting will undermine corporate governance.

Intel announced last year that it planned to have a completely virtual meeting in 2010. But last week the company scrapped those plans after receiving a shareholder resolution and opposition from activists who were against the move.

Cary Klafter, Intel’s corporate secretary, says moving toward an online-only meeting made sense for the company. Only 85 investors attended the company’s 2009 annual meeting in Santa Clara, Calif. No new announcements are made at the meetings, shareholder voting is conducted beforehand, and moving online would save the company money, he says.

Shareholder activists worry that online-only meetings will strip their right to ask questions of board members and management, present their shareholder resolutions, file motions on the floor of the meeting, and protest against the company in a way that draws attention to their cause.

“The opportunity to look face-to-face and engage the board is absolutely essential to good governance,” says Laura Berry, executive director of the Interfaith Center on Corporate Responsibility. The group joined forces with Walden Asset Management to file a proposal against Intel’s online-only meeting, which has since been withdrawn. Berry says she supports companies that broadcast their annual meeting online but doesn’t want new technology to substitute for the physical meeting.

While activists might want the in-person meetings so that they can draw attention to a particular cause, it’s the protesting and antics that may induce more companies to move online with their meetings. In 2006, none of Home Depot’s independent directors showed up to the annual meeting amid concerns of investor outrage over then-CEO Bob Nardelli’s pay package. “There is no good purpose served for a few to dominate a meeting for the purpose of yelling insults and personal attacks that must simply be endured because responding would be useless,” Home Depot’s lead director Bonnie Hill told Agenda at the time. There were reports of individuals dressed in chicken suits carrying signs at the meeting.

Klafter says in Intel’s case the company had no intent to use the online meeting to draw down participation from the board. At a minimum the company was planning to have directors phone in to the online meeting, but the company was also considering having board members meet at company headquarters and be on camera. Klafter says sometimes shareholders will ask questions directed at a specific board member or chair of a committee and the company wanted that practice to continue during the Web meeting.

  

Online-only meetings have their genesis in a revision to Delaware’s corporate law that was made in 2000. This clarified that companies did not have to hold their annual meetings at a physical location open to investors.

Since then only a handful of companies have jumped on the virtual bandwagon, but more companies could be joining the ranks. Last year, Broadridge Financial Solutions unveiled new technology that enables companies to conduct online-only annual meetings. Intel was supposed to be Broadridge’s first client for the new software. Broadridge used the virtual technology to host its own online-only shareholder meeting in 2009. Many shareholder groups see Broadridge’s entry into this business as an encouragement for more companies to go entirely online.

Dominic Jones, author of the IR Web Report and an investor relations expert, says it may not be a smart move for companies to eliminate their in-person shareholder meetings. “Companies risk giving the impression that they don’t take corporate governance seriously,” Jones says. In-person annual meetings are “an acknowledgment of the important role of the shareowner in the company. That might seem old-fashioned, but making a big fuss over your shareowners will never be unfashionable,” he says.

There are few statistics on whether online meetings draw more interest from shareholders than in-person meetings, because so few companies have experimented with the option. Herman Miller’s last online meeting, on Oct. 15, spanned about 15 minutes and there weren’t any questions from shareholders, Jones says.

A Herman Miller spokesman says while that’s true, when the annual meeting was held at a physical location it was typically short and suffered from low attendance. “Part of our rationale for moving to [online meetings] is historically we’ve had very, very low attendance at our physical meeting,” says Jeff Stutz, vice president of investor relations at Herman Miller. In fact, Stutz says attendance for the online meeting is a little bit higher than it was when the company held annual meetings in person.

Shareholders concerned about this movement are planning to hold a conference this fall to create standards for virtual meetings that would help safeguard certain shareholder rights that are recognized during in-person annual meetings. Intel plans to participate in the conference.

 

 

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Inquiries, requests to be included in email distribution lists, and suggestions of new Forum subjects may be addressed to inquiry@shareholderforum.com.

Publicly open programs of the Shareholder Forum are conducted for free participation of all shareholders of a subject company and any fiduciaries or professionals concerned with their decisions, according to the Forum’s stated "Conditions of Participation." In all cases, each participant is expected to make independent use of information obtained through the Forum, and participation is considered private unless the party specifically authorizes identification.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.