A growing number of U.S. companies are holding their annual shareholder meetings exclusively online. Thirty-four companies this year (using Broadridge’s technology) incorporated a virtual component to their annual meeting process. Nine of those companies opted to have a virtual only annual meeting. Although they are uncommon, online-only annual meetings are not new. It was nine years ago that Inforte became the first U.S. company to conduct its annual meeting solely online. However, it wasn’t until 2009 when Intel became the first company to enable live online voting at its annual meeting that shareholders were able to cast their votes and pose questions online during live meetings. Prior to that, shareowners had to lodge their votes in advance of the meeting date.
Shareholder concerns include the position that virtual-only meetings may undermine board accountability and exacerbate plunging retail voting rates. In addition, the virtual only annual meeting recently became a corporate governance issue which came out of pressure from some labor unions that requested a physical annual meeting as well.
The emergence of virtual annual meetings comes at a time when many U.S. companies have seen a sharp drop in retail shareowner voting rates, largely due to the U.S. Securities and Exchange Commission (SEC) decision to allow companies to publish their annual meeting materials on the web instead of mailing printed copies to all shareholders.
Some observers believe virtual annual meetings could help to engage more retail investors in the annual meeting process. Others are convinced that there is a reasonable risk that virtual-only meetings could lead to fewer retail votes being cast because shareowners who otherwise would vote in advance of the meeting date might now wait for the live meeting and then miss the opportunity to vote for any number of technical reasons. It’s noteworthy that most of the companies opting for online-only meetings thus far have been fairly closely held by insiders and a handful of big institutional investors, who typically always vote their shares. There are few potential downsides to these companies if retail investors fail to vote.
The debate around virtual-only meetings is just getting started. Some companies moving to them are doing so because they don’t see value in having a shareowner meeting at all if only a few people show up. They are out to do the bare minimum they can get away with. A few forward-thinking IROs and corporate secretaries, however, see virtual meetings as a way to involve more people in the governance process. Ultimately, though, it is not the technology that will change things, but the willingness of directors and senior executives to get involved.
Where do you stand on Virtual Annual meetings?