May 21, 2010
An investor’s need to question and to observe:
Several discussions this week have focused on the importance of
shareholders’ ability to not only ask their own questions, but also to
observe other investors’ questions and management’s responses to them. The
value of open Q-and-A is evident not only in peaceful meetings such as
Intel’s, but also in contentious ones. As we recently reported, Intel’s
process of publicly posting questions and answers generated increased
investor interest. And in the news section below,
we further address the subject with several examples of controversial
meetings, some of which were webcast.
Forum purpose to identify what
should be considered:
Questions have been raised about the
level of “standards” the Forum should be trying to define. According the
Forum’s chairman, Gary Lutin, the stated purpose of the E-Meetings program
was strictly limited to identifying the conditions of fair conduct that
most marketplace participants consider relevant, and not trying to decide
how a company should satisfy those conditions. It will then be up to each
company's management to develop solutions to suit their own particular
circumstances and investor interests.
News reports of four “traditional”
annual meetings – for Massey Energy Company (NYSE: MEE; $3
billion), JPMorgan Chase (NYSE: JPM; $151 billion), State Street
Corporation (NYSE: STT; $20 billion), and WellPoint, Inc.
(NYSE: WLP; $22 billion) – were presented in a
Forum Report as examples of a range of
notable shareholder confrontations at in-person meetings, focusing on
investors’ ability in those conventional meetings to observe both what was
presented and how management responded.
Intel’s May 19 meeting, which was the subject of
last week’s Focus Report,
generated two reactions worth noting. One was from an in-person attendee
who identified himself during the question period as an individual
shareholder of twenty years. Apparently unaware of the company’s
web site posting
of its extensive “Investor Day” business review, he expressed
disappointment that the traditional business summary had been dropped from
the meeting agenda. Another was from a shareholder voting rights advocate
who had observed the webcast and posted a
praising the meeting’s conduct but raising concerns about possible
limitations of electronic participation. A
replay of the meeting's video webcast is now available.
NVIDIA reported that its
Wednesday meeting, also
noted last week, generated roughly 50% higher attendance online than
what they'd seen last year in a traditional in-person meeting. You can
archived version of their audio and slide webcast.
When Basics Suffice:
No Bells, Whistles or Questions at Warner Music’s Meeting
the archived webcast of Warner Music's "pure virtual" annual
It is no secret that companies with small retail ownership and low
annual meeting attendance find value in running an annual meeting that
is low-cost and efficient. Now, as virtual annual meetings become more
prevalent, some companies like Warner Music Group (NYSE: WMG,
$900 million), are finding that a basic, no-frills virtual shareholder
meeting can offer just that.
Warner Music Group, which went public in 2005 in a $554 million IPO,
is headed by the perennially charitable Edgar Bronfman, Jr., and its
ownership consists of more than 95% institutions and management. The
company held a basic audio-only webcast in February that lasted a
total of about eight minutes and fetched not one shareholder question.
Still, the meeting demonstrates how a bare-bones electronic
participation platform can be an effective way to lower costs while
protecting shareholders’ right to participate.
The meeting satisfied basic requirements with its audio webcast and
provisions allowing shareholders to cast votes as well as to ask
questions live online during the meeting.
After announcements and readings of the formal statements,
participants were informed that the company’s CFO and two auditors
were ready to answer shareholder questions. But after a brief pause to
check for questions, it turned out that none were asked. A
disappointed but optimistic-sounding Bronfman reported, “it appears we
did not receive any questions from stockholders.” Not one to dwell on
the absence of questions, Bronfman concluded the meeting with a nod to
the future. “We look to the potential this format offers to increase
Avital Louria Hahn
a Shareholder Forum project
© 2010 The Shareholder Forum