Shareholders Feel Muted as Companies Switch to Virtual Annual
Remote events have been shorter and allocated less time to
shareholder questions, study finds
Mitsubishi Motors is among the many companies to hold virtual
annual shareholder meetings this year during the pandemic.
Mitsubishi’s board participated remotely during the auto maker’s
June meeting that was streamed on its website.
PHOTO: MITSUBISHI MOTORS
Aug. 23, 2020 9:00 am ET
are finding virtual shareholder meetings to be cheaper and less
time-consuming, but shareholders complain they don’t get as much time
to ask their questions.
majority of the companies in the S&P 500 this year have decided to move their
shareholder meeting—usually an in-person event—online due to coronavirus-related
restrictions on large gatherings. Faced with the option to postpone the meeting
until later, 87% of businesses opted for a virtual event compared with 23% of
meetings held remotely in 2019, according to data provider MyLogIQ.
Executives and investors usually like that they can dial into these meetings
from their homes. But despite the ease of access, shareholders say remote events
offer less scope for participation as many companies ask for questions in
advance, respond only to a select number of them and don’t disclose how many
queries were received.
companies scrambled to make the switch as the pandemic accelerated in the
spring. Numerous businesses weren’t familiar with the technology platforms used
for such large, live meetings and quickly had to adapt their protocols to the
investor events held by companies in the S&P 500 this year averaged 32 minutes,
seven minutes shorter than in-person shareholder meetings in 2019, according to
a recent study of more than 90 annual meetings by the Hebrew University of
Jerusalem. Further, company executives allocated less time for business updates
and for answering shareholders’ questions compared with in-person meetings in
2019, the study said.
Berkshire Hathaway's annual shareholder meeting in Omaha, Neb.,
was packed in May 2019.
PHOTO: SCOTT MORGAN/REUTERS.
In May 2020, Berkshire Hathaway Chairman and Chief Executive
Warren Buffett spoke during a virtual shareholder meeting as his company
abandoned the live gathering amid the pandemic.
PHOTO: ANDREW HARRER/BLOOMBERG NEWS
Inc., failed to acknowledge some or all questions from investors, according to
the study by Miriam Schwartz-Ziv, a senior lecturer at the School of Business
the rules for its virtual meeting may permit it to respond to one question per
shareholder only. “We received numerous questions from a single shareholder,” a
spokeswoman for the company said. “Some of these questions were answered, but we
also devoted attention to questions from other shareholders, which happened to
be more relevant to our business.” Salesforce declined to comment, while Alexion
didn’t respond to a request for feedback.
study’s findings echo observations from shareholder organizations, including the
Council of Institutional Investors, which last month sent a letter to the
Securities and Exchange Commission detailing its and other groups’ concerns.
shareholder meetings can be used to manage shareholders in ways that aren’t
fair,” said Amy Borrus, executive director of the CII. “[Companies] can sidestep
dissent if they choose to.”
virtual meeting, Verizon
Communications Inc. limited
questions to those related to shareholder proposals and required investors to
register three days in advance, according to the study. “We gave shareholders
the opportunity to ask questions on the shareholder proposals, or on any
subject, at the end of the meeting, and opened the virtual platform for
questions several days in advance of the meeting,” a company spokeswoman said.
She added Verizon didn’t receive any questions relating to shareholder proposals
or the company’s business.
Taggart, an investor in Houston-based liquid natural gas exporter Cheniere
Energy Inc., said there was a lack of interaction between shareholders and
management during the company’s shareholder meeting May 14. “I had no idea how
many people attended,” said Mr. Taggart. “It could have been just me.” A
Cheniere spokesman said shareholders representing more than 86% of its common
stock took part in that meeting.
ways, however, virtual meetings can enhance shareholder participation. James
McRitchie, an investor in about 150 U.S. companies and a contributor to Ms.
Schwartz-Ziv’s study, said he was able to attend more meetings because they were
held remotely. Mr. McRitchie said he has taken part in 30 investor meetings this
year compared with about 10 all of last year, but added that he missed the
ability to interact directly with other shareholders.
and technology providers are looking for ways to improve remote shareholder
Financial Solutions Inc. —which
has hosted more than 1,500 virtual shareholder events this year—is gathering
feedback from companies and shareholders and said it would innovate in areas
such as question-and-answer sessions and interactivity, said Cathy Conlon, head
of corporate issuer strategy and product management.
Communications Inc., an investor communications company, also wants to learn
from its experiences, said Sherry Moreland, the company’s president and chief
operating officer. About 75% of clients that conducted a virtual shareholder
meeting this year—Mediant had more than 150 such remote events in total—are
considering doing it again next year, said Ms. Moreland.
companies, however, want to go back to the old ways. “We have a history [of]
doing it in person. There is not a huge push to move to fully virtual,” a
spokesman for Cheniere Energy said
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