Shareholders Feel Muted as Companies Switch to Virtual Annual Meetings
August 23 2020 - 9:29AM
Dow Jones News
By Nina Trentmann
Companies are finding virtual shareholder meetings to be cheaper
and less time-consuming, but shareholders complain they don't get
as much time to ask their questions.
A majority of the companies in the S&P 500 this year have
decided to move their shareholder meeting -- usually an in-person
event -- online due to coronavirus-related restrictions on large
gatherings. Faced with the option to postpone the meeting until
later, 87% of businesses opted for a virtual event compared with
23% of meetings held remotely in 2019, according to data provider
MyLogIQ.
Executives and investors usually like that they can dial into
these meetings from their homes. But despite the ease of access,
shareholders say remote events offer less scope for participation
as many companies ask for questions in advance, respond only to a
select number of them and don't disclose how many queries were
received.
Many companies scrambled to make the switch as the pandemic
accelerated in the spring. Numerous businesses weren't familiar
with the technology platforms used for such large, live meetings
and quickly had to adapt their protocols to the new format.
Remote investor events held by companies in the S&P 500 this
year averaged 32 minutes, seven minutes shorter than in-person
shareholder meetings in 2019, according to a recent study of more
than 90 annual meetings by the Hebrew University of Jerusalem.
Further, company executives allocated less time for business
updates and for answering shareholders' questions compared with
in-person meetings in 2019, the study said.
Companies, including eBay Inc., Salesforce.com Inc. and Alexion
Pharmaceuticals Inc., failed to acknowledge some or all questions
from investors, according to the study by Miriam Schwartz-Ziv, a
senior lecturer at the School of Business Administration.
EBay said the rules for its virtual meeting may permit it to
respond to one question per shareholder only. "We received numerous
questions from a single shareholder," a spokeswoman for the company
said. "Some of these questions were answered, but we also devoted
attention to questions from other shareholders, which happened to
be more relevant to our business." Salesforce declined to comment,
while Alexion didn't respond to a request for feedback.
The study's findings echo observations from shareholder
organizations, including the Council of Institutional Investors,
which last month sent a letter to the Securities and Exchange
Commission detailing its and other groups' concerns.
"Virtual shareholder meetings can be used to manage shareholders
in ways that aren't fair," said Amy Borrus, executive director of
the CII. "[Companies] can sidestep dissent if they choose to."
In its virtual meeting, Verizon Communications Inc. limited
questions to those related to shareholder proposals and required
investors to register three days in advance, according to the
study. "We gave shareholders the opportunity to ask questions on
the shareholder proposals, or on any subject, at the end of the
meeting, and opened the virtual platform for questions several days
in advance of the meeting," a company spokeswoman said. She added
Verizon didn't receive any questions relating to shareholder
proposals or the company's business.
Stewart Taggart, an investor in Houston-based liquid natural gas
exporter Cheniere Energy Inc., said there was a lack of interaction
between shareholders and management during the company's
shareholder meeting May 14. "I had no idea how many people
attended," said Mr. Taggart. "It could have been just me." A
Cheniere spokesman said shareholders representing more than 86% of
its common stock took part in that meeting.
In some ways, however, virtual meetings can enhance shareholder
participation. James McRitchie, an investor in about 150 U.S.
companies and a contributor to Ms. Schwartz-Ziv's study, said he
was able to attend more meetings because they were held remotely.
Mr. McRitchie said he has taken part in 30 investor meetings this
year compared with about 10 all of last year, but added that he
missed the ability to interact directly with other
shareholders.
Companies and technology providers are looking for ways to
improve remote shareholder meetings. Broadridge Financial Solutions
Inc. -- which has hosted more than 1,500 virtual shareholder events
this year -- is gathering feedback from companies and shareholders
and said it would innovate in areas such as question-and-answer
sessions and interactivity, said Cathy Conlon, head of corporate
issuer strategy and product management.
Mediant Communications Inc., an investor communications company,
also wants to learn from its experiences, said Sherry Moreland, the
company's president and chief operating officer. About 75% of
clients that conducted a virtual shareholder meeting this year --
Mediant had more than 150 such remote events in total -- are
considering doing it again next year, said Ms. Moreland.
Some companies, however, want to go back to the old ways. "We
have a history [of] doing it in person. There is not a huge push to
move to fully virtual," a spokesman for Cheniere Energy said.
Write to Nina Trentmann at nina.trentmann@wsj.com
(END) Dow Jones Newswires
August 23, 2020 09:14 ET (13:14 GMT)
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