Bloomberg, June 13, 2019 article: "Access Denied? Investors Lament Shift to Virtual Annual Meetings" [Virtual shareholder meeting process adopted after 10 years by only 257 (4.5%) of 5,700 U.S. public companies]

The Shareholder ForumTM

Electronic Participation in Shareholder Meetings

Forum Home Page [see Broadridge note below]

"E-Meetings" Home Page

"E-Meetings" Program Reference

Forum distribution:

Virtual shareholder meeting process adopted after 10 years by only 257 (4.5%) of 5,700 U.S. public companies

 

For previous Forum attention to the issues addressed below, including widespread concerns about the use of "virtual-only" meetings, see its 2010 public program to establish marketplace standards for Electronic Participation in Shareholder Meetings.

Note: Both Broadridge Financial Solutions, Inc. and Intel Corporation, whose support of "virtual" meetings is reported below, had provided invited support of the referenced 2010 Forum program.

 

Source: Bloomberg, June 13, 2019 article

 


 

Business

Access Denied? Investors Lament Shift to Virtual Annual Meetings

By Tom Metcalf

June 13, 2019, 9:14 AM EDT

 


Critics say shift from in-person gatherings stymies debate


Netflix and Intel among U.S. companies to stop physical events


General Motors Co.’s annual meeting last week lacked what used to be an essential element: shareholders.

For the first time, the carmaker held the gathering virtually, answering questions investors submitted online, joining companies like Lululemon Athletica Inc., Netflix Inc. and Intel Corp. in stopping physical events.

Not all investors were happy.

John Chevedden, a shareholder activist, called on GM investors to vote against the appointment of three directors in protest of the automaker’s decision to ditch in-the-flesh gatherings.

“An in-person annual meeting is a motivator of good performance by management and directors,” Chevedden said in a filing. “Who wants to stand in front of a live audience and explain shrinking sales, epic recalls and loss of market share? It is so much easier to explain it to a microphone.”

GM spokeswoman Juli Huston-Rough defended the practice.

Online meetings “provide better opportunity for more shareholders to participate regardless of where they live,” she said in an emailed statement. “For many shareholders, attending a live meeting isn’t feasible because of geography or travel expense.”

In the U.K., the Investment Association, a trade body that represents portfolio managers who collectively oversee about $10 trillion of assets, has said it doesn’t support virtual-only meetings. Lululemon’s billionaire founder Chip Wilson, the biggest individual shareholder, has complained that the company’s switch to the format in 2016 thwarted his ability to ask the board uncomfortable questions.

Still, the practice is becoming more prevalent.

Broadridge Financial Solutions Inc., which offers firms a platform to host online-only meetings, supported 257 such events in 2018, up from 212 in 2017 and just one in 2009, when it introduced the product. Proxy adviser Institutional Shareholder Services is currently tracking 186 virtual-only meetings that have already happened or are scheduled for later this year.

Supporters of virtual meetings say the cost savings can be significant and allow shareholders worldwide to participate.

“Companies aren’t doing it to hide, they just want to make the meetings more useful,” said Cathy Conlon, head of corporate issuer strategy at Broadridge. “It allows retail investors to have access to the company. People complaining about virtual meetings are generally those who already have access to the company.”

Marc Goldstein, head of U.S. research at ISS, said the most investor-friendly solution would be a hybrid meeting combining a live event that’s also carried online. For many firms, that defeats the purpose of making the virtual switch.

U.S. shareholders who object to such shifts have little recourse. While companies that wish to make the switch from physical meetings have to put that to a shareholder vote in Britain and some other markets, there’s no such requirement for most U.S. firms, according to Goldstein.

For now, most companies haven’t abandoned traditional shareholder meetings, which give mom-and-pop investors a platform to voice their ideas and concerns. That can make for some awkward moments for executives. At Bombardier Inc.’s event in Montreal last month, a shareholder who said he had held the stock for almost six decades asked why the plane and train maker, which is in the middle of a turnaround plan, hasn’t paid a dividend for years while rewarding top executives with “staggering” pay. His comments drew some applause.

But virtual-only meetings can also be awkward. At Lululemon’s meeting, Wilson submitted eight questions, most of which focused on whether the board had deliberately ignored his questions at previous gatherings. This time, the company offered answers to most of his questions and still managed to wrap up the entire proceeding in about 20 minutes.

With assistance by David Welch, and Sandrine Rastello

 


©2019 Bloomberg L.P. All Rights Reserved 

 

 

 

 

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 e-mtg@shareholderforum.com.

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.