The Shareholder ForumTM

Electronic Participation in Shareholder Meetings

Forum Home Page [see Broadridge note below]

"E-Meetings" Home Page

"E-Meetings" Program Reference


E-Meetings Review

a project of

The Shareholder Forum

in support of its program for

Electronic Participation in Shareholder Meetings


Participant Questions

News Digest

Meeting Observations

Focus Report


June 18, 2010


Participant Questions and Comments


Will the use of new technology reduce shareholder access to management?

One of the issues that stimulated the Forum’s initiation of the E-Meetings program was some investors’ fear that new processes could be used to deprive shareholders of important rights, particularly of the annual opportunity to present management with questions and observe their responses. It should be noted that a traditional shareholder meeting can be conducted without responding to attendee questions, as some companies have always demonstrated, and we must realistically assume that the kind of communication technology that’s available won’t change that. But for those who want to improve the quality of information exchanges, a fresh look at the process in the context of modern technologies presents great opportunities to freely adapt the timing and method of investor communications to suit the particular decision-making conditions.


We’ve recently reported the results of this kind of adaptation in the evolution of quarterly earnings conference calls, which provided significantly improved access to information for both professional and non-professional investors. Testing the potential for similar improvements in annual meetings, the Forum’s chairman, Gary Lutin, reports that he asked several investors whether they would prefer to present views to directors during an annual shareholder meeting  after the voting is completed, or a month or so in advance of the meeting, before they’ve made voting decisions. Every single one chose the pre-decision timing.


The consensus from this mini-poll suggests that we should look at everything that has been proven valuable and think about how to do it better. That includes being alert to bad results and abuses, of course, but there is no reason to approach this as a defense of clearly less effective traditional practices.


If companies aren’t required to respond to shareholders at an annual meeting, how can investors monitor management?

We have learned from preliminary reports of the special project workshop for legal and administrative review that the requirements of corporate annual meetings do not, in fact, include any obligation to invite or respond to shareholder questions. But this does not mean that shareholders do not have the right to ask questions – and get answers. Those rights are just separate from the meeting requirements.* Indeed, these rights apply broadly, and they are not conditioned on whether the question is presented at an annual meeting, in person, or electronically.


More importantly, investor access to information is also supported by common sense. Past Forum programs have repeatedly demonstrated this. First, investors can always observe whether a company’s management invites and responds to questions, and take those observations into account in their voting or buy-sell decisions. Whether from a sense of responsibility or practicality, most corporate managers appreciate the value of winning the respect of investors who vote and buy stock. For the exceptions, an investor can resort to more visible or formal demands for information, and if necessary rely upon the ultimate rights provided by state laws. None of this will be changed by the use of modern communications.


* The foundation of investor rights to information is in state corporate laws such as Delaware’s Corporation Law Section 220 that allow shareholders to inspect the books and records of their company.


News Digest


Our research uncovered an AP news report from a while before the E-Meetings program was initiated – about 38 years, actually – titled “Shareholders Meeting Now Only a Ritual.” It quotes the widely respected conglomerate founder, J.B. Fuqua, for whom Duke’s business school is named, as believing that shareholder meetings had been meaningful in the past, but that in 1972 everything important was done before the meeting by telephone or mail. We review some more recent adaptations to the conditions he observed in this week’s Focus Report, below.    


Several news reports this week addressed political processes that may increase the interest of investors, corporate managers, proxy advisors and other professionals in communications related to annual meetings and shareholder voting. We will welcome your advice of any issues that we should be covering.


Meeting Observations


As annual-meeting season winds down, all but two of the nine meetings on our observation list have been completed. Of the remaining ones, the next will be the Best Buy meeting, described last week, which will take place next Thursday, June 24, at 9:30am Central Time. (Click here to watch it live.) The last meeting on our current list will be Dell’s, about a month from now on July 16, for which we will soon provide details.






Why Wait for the Annual Meeting?



For decades, annual meetings have been criticized as vestiges of ancient rituals designed to serve the interests of shareholders – in another era. Back then – and the “then” may be 100 years ago – shareholders would make their way, sometimes by horse-drawn carriage, to a certain location on a certain date, time and hour, to vote as well as learn about the company in which they invested. The meeting was a major information-exchange event, and one that couldn’t have been done any other way.

Fast forward to 2010. As companies blog, twitter, conference call and web cast, communication with investors is becoming more frequent, more easily available, and less clustered around an event. Some companies are delivering quarterly reports a day or two ahead of conference calls. And some have begun experimenting with their annual meetings by taking elements typically confined to a traditional meeting, such as shareholder Q-and-A, and delivering them before or after the meeting.

Timing the delivery of information

Instead of concentrating high-cost communication in a convening event such as an annual meeting, today’s lower-cost communication technologies have enabled companies to more closely align the release of information with availability as well as with its role in decision-making. This has meant more frequent communication, and a pattern that is beginning to resemble a continuum. And as elements of the information exchange that were once clustered together begin to become liberated from the confines of an event, companies also have the opportunity to reexamine their communication practices to better suit shareholder interests as well as choose better timing for the information’s delivery.

It is important, however, to remember that the idea of segmenting communication to increase effectiveness is not new. The foundations of continuum communication were set about 75 years ago when the Securities and Exchange Commission established the rules requiring companies to send information to shareholders prior to the meeting. Subsequent developments in securities record administration have resulted in virtually all the voting occurring before the meeting. So, we are already dealing with a system in which all the important communications take place in advance of the meeting.

Yet most companies still hold annual meetings in a way that resembles the days of the buggy. Now, instead of a large and interested audience, attendance is meager. It’s no wonder! Instead of fate-changing debates and decisions, voting is virtually completed before the meeting even starts. And, ironically, it has become conventional practice for the vestigial Q-and-A to take place not before voting, when it might influence a decision, but after the voting has been completed, and even after the formal part of the meeting has closed.

A fresh look at the old Q-and-A

Timothy Smith, SVP at Walden Asset Management and a veteran shareholder activist, would like to see companies improve two practices regarding Q-and-A. One, to have the Q-and-A held before the vote, not after. “What if the CEO said something outrageous during the meeting and you did not want to vote for that board?” he says. Second, Smith says, include the Q-and-A in the formal part of the meeting. Holding the Q-and-A after the official part of the meeting has been adjourned, as most companies do, implies a status of an “informal, unofficial informational session” that “sends the wrong signal,” he says. “It sends the message that Q-and-A is a conversational rather than an integral part that relates to the votes.”

Overall, Smith wants to see companies treat Q-and-As as an important element of their shareholder communication, and not, as in some cases, an obligation that is greeted with defensiveness or even hostility. He has been favorably impressed by efforts of companies like Intel that have actually expanded Q-and-As to both before and after the meeting. And he wants to see it extend beyond the meeting event, suggesting that companies take the answers from the Q-and-A and append them to the annual meeting. “Compilation of major questions appended to the annual meting report would be the closing of the loop.”

Testing more effective communications

Recent examples point to many companies beginning to look at expanded timing of annual meetings. Nearly all of the companies on our meetings observation list, for example, have begun liberating elements of their Q-and-A sessions from the confines of the meeting and delivering them before as well as after the meeting.

Berkshire Hathaway, which did not even web cast its meeting, broadened the opportunity for investors to ask questions by asking them to email questions to three financial journalists prior to the meeting. The journalists, who served as objective moderators, chose the most important questions for the chief executives to answer in a five-hour answer marathon during the meeting. This gave shareholders more time to prepare their questions, allowed third parties to organize and prioritize the questions, and provided management with an opportunity to focus on issues of broad interest.

Best Buy has opened a message board about five weeks before its meeting on which validated shareholders can ask questions. The company says it will answer as many as time allows during the meeting. For the remaining questions it will either post answers on the message board, which it will keep open for a few days after the meeting, or reply directly to the individuals.

Intel, which also opened a message board more than a month prior to its meeting, collected some 160 questions from the Internet, and answered more than two dozens before the meeting. It answered some more during the meeting, and has committed to answering all that remain after the meeting. “I like what Intel did,” says Smith. “It shows respect for the dialogue.”

Dell has taken an extra step in the continuum approach. Its “Dell Shares” project is actively managed on a continuous, year-round basis as a pioneering corporate blog on which shareholders can ask questions and on which the company replies.

Best Buy, Charles Schwab, Dell and Intel also enabled shareholders to take surveys on the message boards. The information collected helps the companies better prepare for the meeting.

Trends of progress

Quarterly conference calls for earnings reports, previously reported as a leading example of adaptive communications, are also evidencing the trend toward a continuum approach. It had been standard practice for companies to release earnings shortly before the meeting, giving analysts the opportunity to quickly look over the document before joining the conference call. But lately, observes Michael Cotter, SVP of corporate communication services at Thomson Reuters, some companies have released earnings several days before the meeting and even collected analyst questions before the meeting, enabling the company to cluster the questions and answer them in batches. Other companies have scheduled calls dedicated to only Q-and-A, skipping the traditional summary of previously information, Cotter says.

“Companies are beginning to think about how they can leverage technology to make content accessible to the world,” says Cotter, “and are also thinking how investors are using the information and what sequencing would make it user friendly.”

Smith, as a vigorous advocate of investor rights, says he applauds efforts such as Intel’s to open more access for shareholders. Nevertheless, with many companies still treating shareholders with disrespect, much work is still ahead. One thing is certain, he says. “With votes coming in at a 40-50-80-% majority on corporate governance issues, and at 20-40% on social and environmental issues – companies need to pay more serious attention to their shareholders’ input and the messages they are sending.”

Can we all agree on that?




Avital Louria Hahn

E-Meetings Review, a Shareholder Forum project




© 2010 The Shareholder Forum




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.