The Shareholder ForumTM

Electronic Participation in Shareholder Meetings

Forum Home Page [see Broadridge note below]

"E-Meetings" Home Page

"E-Meetings" Program Reference


For previous reports of the fringe controversy addressed below about commercially defined distinctions between "pure virtual" and "hybrid" uses of electronic communications, including the broader marketplace consensus for judging the fairness of meetings regardless of commercial classification, see:, February 7, 2012 posting

corporate governance

Virtual Lockout at Corporate Meetings: Occupy Some Other Space

James McRitchie, February 7, 2012 ,

Glyn Holton, the executive director of USPX, once again expresses his concerns over efforts by Broadridge Financial Solutions to make virtual meetings palatable to shareowners. I urge you to read his post, Locking Out Shareowners (For a Fee).

There are two ways to conduct a virtual annual meeting. One is to allow for both live or virtual participation. Such meetings have been called “hybrid” meetings. The other approach is to bar shareowners from participating in person and to allow only virtual participation. Broadridge likes to preserve the name “virtual” meetings for these, but that is sugar coating. If a state uses lethal injection to execute prisoners, we don’t call it pharmacological punishment. We call it capital punishment. Calling an annual meeting in which shareowners are barred from the room a “virtual” meeting emphasizes means over ends. Let’s call those meetings what they are. They are “lockout” meetings. If a company bars its employees from the factory floor, that is a lockout. If the company bars its shareowners from the annual meeting, that too is a lockout.

Holton has made his opinions regarding virtual meetings known before (see Broadridge Smokes Their Own Dope). Unfortunately, it takes an enormous amount of outrage to stir retail shareonwers to action. For example, although most shareowners believe CEOs are paid too much, only about 5% of retail shareowners who receive proxies on line (“notice and access) bother to vote. As a result, out of thousands of companies, only 43 had packages voted down as of the beginning of January 2012. I joined with Holton and other USPX members to draft say on pay voting guidelines, which I hope get more widespread use this year.

Like Holton, I agreed to serve on the “working group,” sponsored by Broadridge to develop best practices for interfacing shareowners attending online meetings via the Internet. I’m not entirely happy with the process either but I do think it is important that Broadridge hear from retail voters, so I will continue to try to influence practices employed for hybrid meetings. Like Holton and many others, including the $3 trillion Council of Institutional Investors (CII), I oppose “virtual-only” or “lockout” meetings. See CII’s Corporate Governance Policies, especially

4.7 Electronic Meetings: Companies should hold shareowner meetings by remote communication (so-called “virtual” meetings) only as a supplement to traditional in-person shareowner meetings, not as a substitute.

Companies incorporating virtual technology into their shareowner meeting should use it as a tool for broadening, not limiting, shareowner meeting participation. With this objective in mind, a virtual option, if used, should facilitate the opportunity for remote attendees to participate in the meeting to the same degree as in-person attendees.

I won’t go into detail, since I think airing differences in public prematurely can put others on the defensive and I want to give the process a chance to work. However, it should be clear that many of the participants who represent institutional investors are hoping the group will come up with best practices or at least considerations for hybrid meetings, not for virtual-only/lockout meetings, which we oppose.

For example, it is my belief that the online portion of hybrid meetings should be held to higher standards than those conducted entirely in person because those attending virtually will never be able to get the important, often subtle, experiences available only when attending in person. Like CII, I believe remote attendees should be able to “participate in the meeting to the same degree as in-person attendees.” Since they may be unable to pick up subtle clues lost remotely and may not be able to split their votes or to make nominations from the floor, reduced rights should be offset by enhanced elsewhere.

We’ll see how it goes. I respect Holton for his noisy withdrawal but I’ll be sticking around. I’m under no illusion the working group will deter Broadridge from facilitating lockout meetings. My hope is that any guidelines issued will be for hybrid meetings and will reflect best practices that will heighten the ability of those attending hybrid meetings online to be able to more fully participate. I hope the guidelines will also encourage companies considering lockout meetings to reconsider and move, instead, to hybrid forms.

The difference in cost between locking shareowners out of their own annual meeting, telling them to occupy some other space, is minimal in comparison with holding a hybrid meeting. Directors who approve of using the Internet to lock out shareowners may soon find their seats occupied by directors nominated and elected by shareowners.

Disclosure: I own a small number of shares in Broadridge.

© 2012




This Forum program is open, free of charge, to anyone concerned with investor interests in the development of standards for conducting shareholder meetings with electronic participation. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was encouraged by Walden Asset Management, and is proceeding with the invited leadership support of Broadridge Financial Solutions, Inc. and Intel Corporation to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

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.