When it's time for the
annual meeting and things might get ugly, there's no place like the road.
Marshall & Illsley Corp., a
164-year-old Wisconsin bank, usually meets with shareholders each April in
its hometown of Milwaukee. But that was before the bagpipe-playing
firefighters and marching teachers descended on its branches by the
thousands earlier this year to protest contributions from executives to
Gov. Scott Walker. And it was before the board decided to sell the bank to
a Canadian company, a deal that includes $65 million in severance for
those same executives.
M&I postponed its regular
annual meeting and decamped for New York, 900 miles away, for a hasty
special meeting last week. It would be the bank's last shareholders'
meeting - and it only lasted seven minutes. Attendees say executives
promised to take questions at the end but never did, and exited quickly
through a back door after holding a vote to approve the acquisition by BMO
Finance Group, the parent of the Bank of Montreal.
"How can shareholders cast
an informed vote if the executives acting on their behalf fail to answer
basic questions?" says Daniel Pedrotty, director of the office of
investment for the AFL-CIO, which has some members with retirement money
invested in M&I through pension funds.
Executives of publicly
traded companies are required to face their investors once a year at
annual meetings, typically in the spring. These meetings allow
shareholders - ranging from investing clubs made up of grandmas to large
pension funds - to see and question the CEO and other top executives. For
small shareholders, it's likely the only chance to get face time with a
While moving a meeting isn't
a new phenomenon, these annual events are most often held in the city
where a company is headquartered, or in Delaware, where many of them are
incorporated. Sometimes a company might hold its annual shareholder confab
in a location where it has a strong business presence, a significant
number of employees or a new partner.
But critics say going on the
road is also one way companies under fire can hide from angry investors
and avoid confrontations with shareholders and protesters. In many cases,
the strategy has worked, with fewer people making the trek to attend
"Companies should hold
meetings where you get the maximum number of shareholders," says Charles
Elson, director of the Weinberg Center for corporate governance at the
University of Delaware. "If you don't want people to attend or protest,
you choose an inconvenient location."
A few other companies on the
move this year:
_AMR Corp., parent of
American Airlines, held its meeting in Los Angeles. About 50 flight
attendants showed up to protest, nowhere near the hundreds of angry
attendants, pilots and mechanics - upset with executives who take big
bonuses while union contract negotiations have dragged on since 2008 -
that AMR usually draws when it holds meetings in Fort Worth, Texas, where
it is headquartered.
_Goldman Sachs Group Inc.
held its meeting outside New York for the first time, opting for New
Jersey. Goldman moved into a new, 43-story, steel and glass building with
2.1 million square feet in downtown Manhattan in 2010, but said an
auditorium in Jersey City had more room for shareholders. The space was
only half-filled. In the last several years, Goldman's New York offices
have been the target of large protests over anger about large payouts for
top executives and the company's role in the mortgage meltdown.
_JPMorgan Chase & Co., the
nation's second-largest bank, held its annual meeting in Columbus, Ohio.
Although the bank has 17,000 employees working there, the most outside of
New York, its headquarters in Manhattan has been a target of
thousand-person protests. About 400 demonstrators still showed up in
Columbus, railing against the bank's handling of mortgage foreclosures.
At an annual meeting,
executives make presentations and shareholders elect directors to the
board and vote on proposals that require their approval. Investors can
also vote online. The meetings are the only forum where many shareholders
get to air their views on practices and policies of the company directly
to corporate executives and directors.
It can be unpleasant for
executives, who often face a harsh audience and tough questions about
everything from pay to business decisions. At Bank of America's auditorium
in Charlotte, N.C., where the company is based, CEO Brian Moynihan was
visibly squirming on stage during the May 11 annual meeting as he tried to
hurry 18 people who had lined up on the two sides of the auditorium's red
velvet seats to speak to him. Several berated him for the bank's handling
of the foreclosure crisis. For example, Liana Molina, an organizer for the
California Reinvestment Coalition, a nonprofit group, told Moynihan it
wasn't surprising that "B of A is dubbed as Bad for America."
Given such anger, it's no
wonder some companies might want to escape, say shareholder activists -
even if it's just across a river. Lance Lindblom, CEO of the Nathan
Cummings Foundation, a long time shareholder of Goldman Sachs, says the
financial crisis has put a spotlight on the company and led to regular
protests outside its New York headquarters. Moving to Jersey City curtails
the number of protesters who show up, he says.
"The Hudson River acts as a
moat to keep some of them away," Lindblom says.
Goldman's meeting in Jersey
City drew about 250 people and fewer protesters than in the past. A
Goldman spokesman said the space was more conducive to an annual meeting,
but wouldn't say whether there was an auditorium of the same size in the
company's new building in New York. Its meeting had traditionally been
held a few blocks away from its headquarters.
AMR says it is holding
meetings in its "cornerstone" cities, where most of its flights originate.
But in the two years since the road meetings began, the move has also had
the effect of keeping away union protesters. In the past, hundreds of
uniformed pilots and flight attendants would line up outside the annual
confab just south of Dallas-Fort Worth International Airport, near the
company's headquarters, to protest rich management stock bonuses and labor
"In Dallas, you're always
going to get a good crowd," says Laura Glading, president of the
Association of Professional Flight Attendants. "In LA, we were just hoping
to have a presence."
As for Wisconsin's M&I,
spokeswoman Sara Schmitz wouldn't say whether the bank has ever held a
shareholder meeting in New York. She would only say the bank commonly
holds its "business-only" meetings in New York. While shareholders and
angry union groups based in the Midwest say the move made it harder for
them to attend, the bank didn't avoid confrontation altogether. About
1,000 protesters from local unions showed up at the May 17 meeting,
according to attendees.
Companies aren't required to
allow questions at shareholder meetings, but most do. Some companies limit
the time allotted for questions at their meetings. Others allow for hours
of questioning and make their executives available to meet one-on-one with
shareholders. For example, Warren Buffett and other Berkshire Hathaway
executives regularly answer dozens of shareholder questions over several
hours during the company's annual meeting, which attracts some 40,000
shareholders. This year was no different, despite negative news about
questionable stock sales by a recently departed executive.
And not every company is
running away from home. General Motors will hold its first annual meeting
since 2008, its last before it went into bankruptcy and government
ownership, and will do so in Detroit. Previously, for more than a decade,
it held its meetings in Wilmington, Del. Spokeswoman Renee Rashid-Merem
said that besides cost savings by holding the meeting locally, it also
showed that GM is committed to its home city. After bankruptcy and a $50
billion rescue package from the U.S. government, the company went public
again this year. It's making money and sales are up.
"Given all that the company
and our stakeholders have gone through to rebuild General Motors, we felt
it was most appropriate to hold our first post-IPO meeting here in
Detroit," Rashid-Merem says.
AP Business Writers Tom
Krisher in Detroit, David Koenig in Dallas and Kelvin Chan in Hong Kong
contributed to this story.
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