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Electronic Participation in Shareholder Meetings

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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


July 23, 2010


Participant Questions and Comments


Inviting comments on examples of practices for reporting shareholder questions:

Following up on last week’s report of the interest of many investors in seeing all the questions and comments other shareholders submit to management, the Forum invited comments on two suggested practices: (a) use a meeting break to present all questions for shareholder polling to help prioritize management responses, and (b) allow all meeting participants to present any unresolved issues in post-meeting statements.


(The Forum report inviting comments noted that a review of these examples is being conducted as a test of the fairness standards we are considering, and not as an effort to develop prescriptive “best practice” recommendations. The Forum’s objective is “to support investor interests in broad marketplace testing of what actually works, with each company developing its own practices in competition for investor support.” It was further noted that this objective is consistent with corporate interests supported by the Business Roundtable in its “Principles of Corporate Governance 2010.”)


What should be done with the shareholder meeting?

Jim Kristie, the editor of Directors & Boards and a member of the Forum’s program panel for E-Meetings, has suggested the need for “a rethink of what an annual meeting should be for the next era of corporate governance and shareholder engagement.” The Forum’s chairman observed that this is essentially a question for a company’s directors to decide, and has encouraged Mr. Kristie to consider leading an effort to address this issue for his readers.


News Digest


An IR Magazine – Inside Investor Relations article distributed to Forum participants this week summarized annual meeting data reported by one of the transfer agents with a large base of U.S. company clients. The sampling showed less shareholder activism than had been anticipated for 2010, but the transfer agent projected increased activity next year.


In another distribution this week, an Agenda article reported on what might interest corporate directors in the SEC’s review of “proxy plumbing” issues. Particular note was made of the SEC’s attention to “questions about the proxy advisory industry and whether it has undue influence on the proxy voting system.”


Meeting Observations


There were no developments this week relating to meetings on our observation list.






Investor Information Requirements


Looking at shareholder meeting communications from the investor side, the big challenge will be getting the information needed for making a growing number of significant voting decisions. The sheer number of non-routine voting matters requiring consideration is expected to dramatically increase as a result of the new Financial Reform Act’s provisions for “Say on Pay” and proxy access, and even routine voting matters will continue to require more attention as investors demand improved risk control and accountability. 

And investors want to get this information directly from a company’s management. A December 2009 Shareholder Forum survey of professional investors’ voting criteria showed a more than double preference for direct management sources compared with proxy advisors and other governance research sources.

How leading investors do it

For a view of how the challenge can be managed if you have the resources to do it right, we asked Hye-Won Choi,* senior VP of corporate governance at TIAA-CREF and co-chair of the SEC Investor Advisory Committee, to tell us how things are done at her firm. TIAA-CREF, known for its leadership in governance policies and constructive communications practices, generally has quarterly meetings or calls with several of its large portfolio companies, and speaks frequently to a number of executive functions including the investor relations executive, the corporate secretary, the CFO, or the head of governance. Sometimes it is the companies that initiate communications, to find out such things as what the fund thinks of various issues, Choi says. “We are not picky about the structure or the mode or the type of communication, as long as communications occur in some form,” she says. “We do it all year and in all sort of ways, whatever is more convenient – they can be structured conversations, unstructured conversations, formal, informal, over the phone or in person.”

We also asked how they do things at Blue Harbour Group, an investment firm that concentrates its portfolio in a small number of long term positions that justify their full attention. David Silverman,* managing director of Blue Harbour and chairman of the New York Society of Security Analysts corporate governance committee, described practices of continuous communication with multiple management representatives that were similar to what was reported at TIAA-CREF. Silverman explained that his firm’s significant commitment to each of its portfolio companies’ long-term success makes it especially important for them to be able to talk to management representatives who can discuss more than just the quarterly and yearly view. “As a long term, lead shareholder, we find it is helpful to speak both with management and the board about the company’s long-term horizon,” he says.

The rest of us

Mark Latham, founding director of Proxy Democracy and a representative of individual investors on the SEC Investor Advisory Committee, has been concerned for some time with how shareholders that lack the resources of large institutional investors can make informed voting decisions. A staunch believer in the power of the Internet to transform shareholder dynamics, Latham proposes making greater use of electronic communications technologies to give small investors easy, inexpensive access to the views of professionals who do have the resources to perform research and ask questions.

Others see the use of electronic technologies as a means of expanding the access of all investors to direct management sources of information, as well as to the views of other investors. A variety of processes, such as webcast meetings and question-and-answer sessions, open the communications to anyone with access to the internet – not just those with access to the resources of a TIAA-CREF or Blue Harbour.

What works for all of us

Indeed, modern technology can be used in a variety of ways that improve communications for everyone – from large to small shareholders.  A high value example is the use of conference calls and webcasts to enable greater access to both executive and board level managers.

TIAA-CREF’s Choi considers direct board communications especially important in relation to executive compensation issues. “Executive compensation is one area where there is greater scrutiny and where if there are any serious issues or problems we would ask for a meeting directly with the compensation committee,” she says.  “There needs to be a better understanding by shareholders of what directors think and by directors of what shareholders care about.”

Silverman at Blue Harbour also considers director participation in communication important to build sound investor relationships. “Companies that want to attract long term holders should consider how they can get investors comfortable with both management and the board,” says Silverman. “When a company chooses to host an analyst day, it is a positive sign if board members are present to hear what investors are asking about and what they are saying.”

Another example for an area where technology can improve communications is “pre-meeting meetings.” An idea that has been getting a lot of interest, many investors favor a communication process that allows discussion of important voting issues before decisions have to be made. But many of them also caution that such meetings should only be held on an as-needed basis when the voting decision justifies the attention, and not routinely. Making the “pre-meeting meetings” a routine practice could mean adding hundreds more meetings to attend. But most importantly, if they are held when there is nothing important to discuss, as TIAA-CREF’s Choi says, they “will become routine and no longer have impact.”

And impactful communication, after all, is what investors are looking for.


* Ms. Choi and Mr. Silverman are members of the Forum’s Program Panel for E-Meetings.




Avital Louria Hahn

E-Meetings Review, a Shareholder Forum project




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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.

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