| NOVEMBER 14, 2011
Meetings Begin to Click
JOANN S. LUBLIN
raised their hands to grill the top brass during this year's annual meeting
Herman Miller Inc., nor buttonholed board members after it ended.
That's because the Oct. 10
session occurred solely in cyberspace—for the fifth straight year. The
furniture maker stopped holding its annual meetings at pricey hotels in
order to "reach a broader shareholder base" and save money, says Jeff Stutz,
treasurer and vice president of investor relations at Herman Miller.
2009, 25 public companies have conducted at least one annual meeting only
Broadridge Financial Solutions Inc., a major provider of such services.
Those with annual
"e-meetings" included Warner Music Group Corp., Applied Minerals Inc. and
But some critics challenge the
value of sacrificing face-to-face accountability just to gain occasional
increased participation, and lament the loss of personal interaction with
executives and directors.
During the meetings,
investors—who log into a website through a 12-digit control number linked to
their brokerage accounts—vote and pose questions electronically. Some
e-meetings are audio only; others include a video component where investors
can see executives seated at a conference table. But few companies post
investor queries online so other shareholders see what gets asked. Instead,
officials running virtual meetings view posted questions and decide which to
"You need to have
give-and-take between shareholders and the board," says Glyn A. Holton,
executive director of U.S. Proxy Exchange.
Last year, after
Symantec Corp. became the first Fortune 500 company to decide to hold a
virtual annual meeting, the investor advocacy group waged a letter-writing
campaign against the computer-security concern.
We didn't want to deprive
shareholders from participating at a physical annual meeting, says Anne
Sheehan, head of corporate governance for the California State Teachers'
Retirement System, a big public pension fund that joined the Symantec
protest. Virtual meetings only make sense when investors take part "as fully
as if they were there in person," Ms. Sheehan adds.
Symantec had embraced
e-meetings because "an information-technology company should be leading the
way toward most cost-effective solutions," says Robert S. "Steve" Miller, a
Symantec board member. Directors agreed the idea would also "improve access
by shareholders not in the area," adds Mr. Miller, the independent lead
director until last month.
The September 2010
online session attracted 31 shareholders, up from only a handful at live
meetings during the prior decade. "We historically have had in the range of
four to six shareholders show up," then Chairman
John W. Thompson said during the virtual meeting.
But stockholder Larry Dohrs,
vice president of Newground Social Investment, was dismayed by what he
thought was a low-tech performance during the e-meeting. He says he couldn't
view submitted questions and officials toned down his query challenging
cyberspace sessions. A Symantec spokeswoman declined to comment.
Symantec abandoned the
virtual-only approach after just one meeting. The board didn't want to "go
to war over this" because some investors preferred to look members in the
eye at annual meetings, Mr. Miller says.
Just three non-employee
stockholders showed up for this year's meeting, held Oct. 25 at Symantec's
headquarters in Mountain View, Calif.
Before its 2007 switch, Herman
Miller says it made sure major investors approved of virtual meetings. "We
spoke with most of the top 10 shareholders," and none opposed the idea, says
Mark Schurman, a company spokesman.
But the furniture manufacturer
hasn't seen the expected surge in participation from the altered format.
Only six investors not employed by Herman Miller attended the 15-minute
online session this fall, matching the high point reached last year.
Still, the latest meeting's
$3,000 cost was far less than the typical tab of $10,000 to $15,000 for
in-person meetings between 2001 and 2006, Mr. Schurman says.
Even some critics expect
virtual meetings to spread further if concerns offer certain safeguards. Mr.
Holton of the U.S. Proxy Exchange, for instance, favors an electronic
display of submitted questions so investors can endorse questions they want
management to answer.
Broadridge will enhance its
virtual-meeting service next year to let corporate clients display
unfiltered questions, says Chuck Callan, its chief regulatory officer. (At
typical live meetings, companies allow a brief question period during which
officials recognize investors' raised hands.)
"We could see 100 companies do
virtual meetings within five years," predicts Broc Romanek, editor of
TheCorporateCounsel.net, an online newsletter which covers corporate
annual meetings probably won't disappear any time soon—especially at big
businesses known for elaborate events.
Berkshire Hathaway Inc. drew tens of thousands of investors to its 2011
meeting at an Omaha arena.
Johnson & Johnson also attracts big crowds. About 1,900 people typically
attend annual meetings of the pharmaceutical giant, says Carol Goodrich, a
Shareholders line up around
7:30 a.m., two hours before the session starts. They get coffee and Danish
pastries beforehand and lunch sandwiches afterward. Everyone takes home
goody bags filled with J&J products ranging from Listerine to baby shampoo.
Joann S. Lublin at
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