WALL STREET JOURNAL.
CFO Journal |
SEC Backs “Virtual-Only” Annual Meeting Option
Jan 12, 2017 2:41 pm ET
RHP’s Chief Executive Dion Weisler in a 2015 file photo.
PHOTO: BRITTA PEDERSEN/DPA/ZUMA
growing popularity of virtual-only shareholder meetings isn’t sitting
well with shareholders.
In the latest round of the debate, the
Securities and Exchange Commission backed the right of companies to
decide on the format of annual meetings.
in December told HP Inc. it could
drop an investor proposal objecting to virtual-only meetings. The proposal
called for a shareholder vote on restoring in-person annual meetings.
A virtual meeting can done over the phone,
online or by using a combination of both. Shareholders log into a special
website using a code or pin number to cast their votes and ask executives
and board members questions.
In granting HP’s no action letter request,
the SEC reaffirmed its earlier position, that company boards of directors
can decide whether the annual meetings should be virtual-only or
The SEC declined to comment beyond the
staff’s response in the letter.
HP Inc. declined to comment. However the law
firm representing HP, Gibson, Dunn & Crutcher LLP, said it’s likely more
companies will follow HP’s lead.
“Given the potential cost savings and
flexibility that can be achieved from holding virtual-only annual
meetings, we expect that more companies will choose to hold virtual-only
annual meetings in the near future,” Lori Zyskowski, Elizabeth Ising and
Ronald Mueller from Gibson Dunn said in a blog post. Ms. Zyskowski
represented HP in the matter.
Companies can also
save money on swag. While some
companies, such as Berkshire Hathaway Inc., are known for lavishing gifts
on shareholders at the annual meeting, many companies have been cutting
back on these expenses in recent years. An attendee of Alphabet Inc.’s
annual meeting in June complained that the company wasn’t giving out bags,
caps or mugs, The Wall Street Journal reported.
Last year, 187 companies used the services of
Broadridge Financial Solutions Inc., the main provider of virtual
shareholder meeting technology, to hold virtual shareholder meetings. This
is up from 28 companies in 2010.
Virtual shareholder meetings have grown in
popularity despite opposition from groups including the Council of
Institutional Investors (CII) and the California Public Employees’
Retirement System, as well as individual investors. Critics say that
companies could use the technology to limit shareholder participation,
allowing executives to cherry pick shareholder questions and avoid
addressing critical issues.
The HP proposal was lodged by John Chevedden,
an activist investor who
earned his corporate gadfly bones by
filing hundreds of shareholder proposals aimed at strengthening
shareholder rights, corporate governance and transparency.
“A cloud meeting gives a company wide
latitude to muzzle shareholders during the mandatory annual meeting,” Mr.
Chevedden said in a letter to the SEC regarding his HP proposal.
“As shareholders we believe it is important
for companies to have in person stockholder meetings where investors can
ask questions and speak before management and the Board,” Mr. Chevedden
said in an email to CFO Journal. “Our request for annual in person
meetings should be seen as basic good governance and not a minor