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For a copy of the lead cover article referenced below by Carl Hagberg, an invited expert for the Forum's July 2010 open meeting to present "Observations from the front line of meeting management," see

For the full set of cover story articles in the subsequently published issue of Directors & Boards, see

Note: James Kristie, the editor of Directors & Boards, has been a member of the Program Panel for the Shareholder Forum's "E-Meetings" public interest program to establish standards for electronic communications associated with annual meetings.


Directors & Boards | E-Briefing, March 1, 2011 editorial and comments


Volume 8, Number 3 •  March 2011


The Fix Is In
One worthy outcome from a trip to Palookaville — a bevy of ideas on how to fix the annual meeting.


First, a story.

Two years ago I decided to attend an annual meeting of shareholders. I had not been to an annual meeting in 15-20 years, for reasons explained further on.

The meeting was being held about a two-hour drive away, not particularly convenient but manageable. I have some skin in the game with this outfit. The company was not performing well — a combination of industry ill winds and shaky management. So I figured the CEO had some explaining to do, and I wanted to see how he took advantage of this opportunity to allay concerns about his leadership in time of duress.

Well, did I get snookered. The meeting was over in 10 minutes. Management ran through the process at a sprint, giving no presentation nor taking questions. The gavel came down on the proceeding before the small group in attendance barely had a chance to settle into our seats.

I seethed all the way home at this colossal waste of a day out of the office — and a colossal missed opportunity by management to sway opinion.

When I first became a business writer and editor (and investor), I experienced a sense of anticipation, even excitement, in attending my first annual meetings. I wanted to see top CEOs in action, see how they handled themselves and told their company’s story smack dab in front of a roomful — in many cases a ballroom full — of their shareholders.

I made it a point to see, and occasionally invest in, some of the great ones at conducting this exercise in shareholder relations: the super-smooth Steve Ross of Warner Communications (later Time Warner), the feisty Bill McGowan of the early MCI Corp., the tough-as-nails Martin Davis of Gulf & Western . . . and Reuben Mark of Colgate-Palmolive, who ran the closest thing to a mutual CEO-shareholder “love fest” of an annual meeting that I ever sat in on.
But it didn’t take long to get totally frustrated with this exercise in corporate democracy. Too often the show-and-tell of the CEO presentations was hijacked by the shout-and-yell of the gadflies’ disruptions. What really made me mad were the meetings where I had to leave before the chief execs even got around to talking about how things were looking for the company. I didn’t count on how longwinded and diversionary the activists could be.

So for about two decades I eschewed attending any annual meetings. Why waste my time? What was I to learn?
All of which was reaffirmed in that trip to Palookaville two years ago.

But my wayward excursion did plant the seed to devote some attention in Directors & Boards to what was wrong with the annual meeting as a corporate communications and shareholder relations event. Then last year, as I mentioned in my editor’s note in the February e-Briefing, my good colleague Gary Lutin, chairman of The Shareholder Forum, invited me to participate on a panel he formed to explore the pros and cons of electronic participation in shareholder meetings. That was the trigger to get me to nail down some serious editorial coverage on fixing the annual meeting.

That special feature is the cover story in the First Quarter edition of Directors & Boards, coming off press just as this March e-Briefing lands in your email inbox. Over the course of 15 pages and some dozen expert commentators, we tee up a bevy of suggestions for “dragging the corporate version of the 19th century towne meeting into the reality of the 21st century global marketplace,” in the words of retired Lockheed Martin Chairman Norman Augustine, one of our authors in this analysis. See the Reader Spotlight below that contains a slice of this cover story.

As I put the wraps on this editor’s note, I see Pat McGurn of ISS quoted in the Feb. 24 Financial Times as saying, “This is the year that the focus shifts back to annual meetings.” Obviously I agree, with this refinement: This is the year that we need to get serious about rethinking the annual meeting for a new era of shareholder engagement.

I know you are all fully paid-up subscribers and will all be reading this cover story closely. Am I right about that!? If for some miscalculation your subscription has lapsed, I will share with you the issue’s leadoff article — an absolutely superb “how to fix” critique by the preeminent annual meeting guru Carl Hagberg. Email me at

Jim Kristie is the editor and associate publisher of  Directors & Boards.

Editor's note:  Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today. This past month we asked for ideas on improving the effectiveness of the annual meeting of shareholders. Here is a selection of responses.  If you'd like to participate in this section in the future, please email Scott Chase

How to Fix the Annual Meeting

Julie Garland McLellan, author of the new book “Presenting to Boards,” and one of Australia’s leading governance experts: “I would remove the ‘annual’ — once a year isn’t engagement. Have an annual polling session with statutory reports but have other interaction for meaningful exchange of ideas between those annual sessions. David Gonski, a well-respected Australian chairman, once reflected that an annual general meeting with shareholders was like a drunken one-night stand with some total strangers! I tend to agree — not that I have ever tried his analogy . . . it is just that I find the meetings so unfulfilling.”

Eleanor Bloxham, CEO, The Value Alliance: “Fixing the annual meeting begins with proper preparation in advance. Step 1: All directors should read every word of all publicly available documents in advance of the meeting with the intent of seeing the company through the eyes of its most knowledgeable outside stakeholders. Step 2: Directors should meet with shareholders and other stakeholders and prepare and present a report of findings at the meeting. Step 3: The board should prepare and present a report on how it has added value for all shareholders and stakeholders and its plans to improve its performance in future years.”

Michael McCauley, senior officer, Investment Programs & Governance, Florida State Board of Administration: “Almost all shareowner meetings are too formal, perfunctory, and sanitized to be useful (apart from the real activities related to proxy voting). Although most likely only a partial fix, I think giving shareowners, and perhaps other non-owner stakeholders, the real ability to place items on the agenda for discussion and reaction by directors (who should be required to attend every AGM) would improve AGM effectiveness.”

C. Warren Neel
, corporate director and executive director of the Corporate Governance Center at the University of Tennessee: “Shareholder governance pressure will obviously continue during the 2011 proxy season as the Dodd-Frank Act interpretation by the SEC continues to become a reality. Meanwhile, in response, some companies are beginning to consider changing the annual meeting process to include both audit and compensation committee chairs offering planned comments during the meeting. The focus would be to provide a visual awareness of a chair and issues that have been considered by a committee.”

Matt Orsagh
, CFA, director, Capital Markets Policy, CFA Institute: “The constraints are real: limited time, limited participation of shareholders, and legal constraints on what can be said. Investors hoping to discern novel insights at the annual meeting are ripe for disappointment. So spend time on giving shareholders a window on how the board and management interact on an issue of substance. Dispense with serial presentations in favor of a less-scripted discussion of an unusually challenging risk or opportunity, with questions from shareholders online or in person. Bring corporate governance to life to validate shareowner confidence in the stewards of their interests.”

Andrew Shapiro, president, Lawndale Capital Management LLC: “The annual meeting should be one of the company’s main investor relations events of the year. It should be a showcase for the company’s products, its culture, its strategic direction, and its corporate governance. In addition to a regular investment or marketing road show, presentation should be made as to various governance structures and activities the company’s board has gone through during the year. Individual board committee chairs should get up and make the presentation of what his/her committee worked on during the year and their goals for the coming year. At a minimum, shareholder input should be solicited and, optimally, dialogue be had. If the above were to be conducted annually and investors could count on it, there would be a build-up of in-person and webcast attendance that would be worthwhile in terms of awareness and positive perception, which would find its way eventually in a higher stock price.”

Glynn Holton, executive director, United States Proxy Exchange, and James McRitchie, publisher of “Advance notice, voting by proxy, shareowner dispersion and other factors reduced the meaningfulness of annual shareowner meetings. Yet, ‘face-to-face accountability,’ as noted by courts, can still change corporate policy. Recent “virtual-only” meetings demonstrate they are not ready for prime time, just as tablet computers introduced decades ago needed years of development prior to iPad success. ‘Hybrid’ meetings provide a testing ground for security issues, intuitive interfaces, independent facilitators using published procedures, Q&A sessions around each proxy item and other experiments that can lead to increased accountability. Technology can facilitate real deliberation or devolution into meaningless ritual. The choice is ours.”

Ron Schneider, senior vice president, Phoenix Advisory Partners: “Regarding the potential role of virtual shareholder meetings, it’s not whether the meeting is ‘virtual’ or not. Is it ‘virtuous’ is the question. Elements of ‘virtuous’ meetings — which technology can assist with — include: 1) Expanding the dialogue in advance of the meeting, identifying and answering the real questions investors have, and 2) Expanding the reach and participation of meetings via technology, in addition to the traditional ‘in person – whites of their eyeballs’ meeting. In this environment, trying to take away a long-standing (if not consistently utilized) shareholder ‘right,’ to attend the annual meeting in person, ask questions of senior management and the board, and both hear their responses and observe their reactions, is swimming against the tide. As for ‘cost,’ physical meetings need not be so expensive, if conducted at company facilities, with a regularly-scheduled board meeting proceeding the shareholder meeting (as many companies do). The greater ‘cost’ will be if the current crisis of confidence and trust is not addressed. Open, accessible shareholder meetings — in which outside directors, rather than sitting mute either on stage or in the front row, actively participate and ‘come alive’ (beyond their two-dimensional proxy statement blurbs) — are one vehicle that can be used to greater benefit toward this end.

Cornish Hitchcock, principal, Hitchcock Law Firm: “How about letting directors answer questions from shareholders? As a rookie meeting attendee once asked me, ‘Why are the directors sitting at the front of the room with their backs to the shareholders? Shouldn’t they be facing the shareholders?’ Of course, the question was utterly guileless, but I didn’t have an answer.”

Camilla Palmieri, University of Lugano, Switzerland: “To improve the corporate governance function of the annual meeting the Q&A session should be compulsory and disclosed. Moreover, companies should make permanently available (on their own websites or through the SEC or analogous authorities) a record or, even better, a transcript of the annual meeting, in order for it to be easily accessible not only to shareholders who could attend but also especially to professionals in the field of communication, who can provide an independent assessment and evaluation of the management responses to shareholders demands in order to stop “corporate opacity” on important matters.”

Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2011, MLR Holdings LLC.




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