A virtual kind of meeting
As shareholder sessions go online, companies see benefits, but investors are
Tuesday, December 06, 2011
By Deborah M. Todd, Pittsburgh Post-Gazette
When DynaVox's board of directors gather Wednesday for their annual
shareholders meeting, they may be the only participants in the room.
For the second year in a row, the South Side-based speech technology company
announced in October that the annual shareholders meeting would be strictly
an online affair.
Investors were sent instructions to download proxy statements and annual
reports, and were encouraged to reject paper proxy votes in favor of online
or telephone votes to "reduce administrative and postage costs."
DynaVox representatives declined to comment for this story but the company's
meeting notices said the e-proxy process will "expedite our shareholders'
receipt of proxy materials, lower the costs of distribution and reduce the
environmental impact of our annual meeting."
Costs aside, investors are expressing mixed feelings about the practice,
which has grown exponentially since the online meeting technology was
introduced in 2009 by Broadridge Financial Solutions, a Lake Success,
N.Y.-based brokerage processing services company.
What started with four virtual meetings in the introductory year grew to 28
last year and reached 39 as of Friday, according to Broadridge. More than
half of those meetings were conducted exclusively online without an option
for investors to attend in person.
On one hand, virtual meetings allow investors from around the globe to plug
in, even as they ease the burden of organizing a meeting space, and perhaps
offering refreshments, for companies who only see a handful of their
investors show up anyway.
On the other hand, some investors call online-only meetings inadequate
replacements for an opportunity to meet company leaders in person, and they
say the technology supporting the meetings falls far short of emulating
"I think shareholders are excited about the potential of virtual shareholder
meetings to increase participation. The potential is huge in that respect,"
said Glyn Holton executive director of the United States Proxy Exchange, a
Boston-based nonprofit organization for shareholders' rights.
"At the same time, the technology can be used adversely in ways that don't
facilitate communication, but actually hamper communication."
He noted his own difficulties signing in to Broadridge's 2010 virtual annual
meeting as an example. Mr. Holton said he spent more than half an hour
dealing with technical difficulties, and was told by customer service
representatives that "a lot" of people were experiencing similar problems. A
company official told him only three or four people experienced difficulties
logging in when he raised the issue during the question-and-answer session.
Broadridge officials said the technology "has functioned as designed and
without incident in each of the meetings where it has been used to date."
Even if the technology operates to its fullest potential, some say it's not
enough to replace a face-to-face encounter.
Companies can choose to operate online meetings with either an audio stream
or an audio/video stream. Companies also have the option to choose whether
everyone included in the meeting can read the questions that are submitted,
and whether certain questions are addressed at all.
The audio-only stream raised the ire of some investors last year during the
annual meeting for Symantec Corp., the Mountain View, Calif.-based computer
security company that owns Norton Security.
After the meeting was over, shareholders discovered only eight of the
company's 11 directors decided to show up, despite the fact that they were
voting whether to keep the directors in place. Shareholders also complained
that the company only answered two questions, despite multiple online
This year, the company hosted a live meeting with an online option for
Symantec was the first Fortune 500 company to host an online-only meeting,
and Timothy Smith, senior vice president of the Boston-based social and
environmental investment firm Walden Asset Management, thinks that company's
experience could be a cautionary tale for what could become regular
occurrences if too many choose that route.
He said any company with a significant public relations problem could duck
the toughest shareholder questions under the online-only format.
"Imagine News Corp. having a virtual-only meeting this year and shareholders
having to send questions by email [from] around the world; there would have
been an outraged cry," he said.
News Corp. has been embroiled in an ethics scandal involving the
phone-hacking of celebrities and even a murder victim, a scandal that
triggered the shutdown of its News of the World publication.
Kelly Howard, Broadridge's vice president of corporate communications, said
the company follows guidelines established by state laws that give companies
a great deal of freedom regarding how they conduct meetings.
Companies hosting annual meetings in person are not required to have
question-and-answer sessions, and there is no law in the 21 states that
allow online-only meetings requiring both audio and video streaming.
Broadridge's "Shareholders Forum" software allows companies the option to
display questions submitted and lets shareholders communicate during
online-only meetings. Next year, the company plans to introduce an option
beyond the Shareholders Forum to list questions submitted online.
However, it is up to individual companies to decide if they want to include
those options as part of their meetings.
"State law affords issuers significant leeway in conducting in-person annual
meetings. Similarly, the Broadridge service is flexible," wrote Mr. Howard
in an email statement.
Mr. Smith said many companies who conduct online meetings are not using them
for the purpose of subterfuge, but he noted that keeping investors away from
company officials makes some question why they're being shut out of the
He understands the benefit to companies who only see a few investors show up
at annual meetings, but he said the online-only process should be a concern
for investors who think their companies have something to hide from
"I bet if we had a vote on having an in-person meeting for a company with
even a whiff of controversy, we'd have a high vote in favor," he said.
Deborah M. Todd:
firstname.lastname@example.org or 412-263-1652.
published on December 6, 2011 at 12:00 am
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