The Boardroom View:
Directors Weigh in on the Annual Meeting
By: JOHN H. STOUT
October 2004
Article in Boardroom Briefing, a joint publication of Directors & Boards Magazine and National Association of Corporate Directors
Many don’t feel that annual meetings are particularly effective at the moment. There’s a sense that they don’t serve much of a purpose beyond counting votes. They can be a lightning rod for certain types of shareholder activism, where the issue becomes more about managing the meeting than the substance of the meeting itself. Annual meetings often are conducted in a very pro forma manner; reports are given; questions, discussion, and commentary are not encouraged. As a result, nothing consequential occurs at the meeting; there is no real exchange among participants. Often non-management directors don’t attend; nor do large shareholders.
I think the notion of collecting input, from shareholders on a periodic basis is important. The challenge is to make annual meetings more meaningful.
If one wants to use the annual meeting to have a meaningful exchange with shareholders on issues of corporate direction and leadership, financial and other matters, then perhaps we can use communications technology to reach more shareholders and solicit views more broadly. We’ve all seen the effective use of technology with analyst calls, and meetings with associated, simultaneous webcasts, etc. We need to put technology to work to improve the effectiveness of annual meetings, from voting to exchanges of information and views.
I wonder if Warren Buffett’s shareholders think annual meetings are a waste of time? Buffett will sit and respond to questions for hours, which means shareholders can have a meeting with the oracle himself. When you really think about what annual meetings were intended to be, maybe there’s something in what he’s doing that’s closer to the point of annual meetings. Such meetings are achievable, particularly if technology is employed to help extend the reach of that kind of engagement with shareholders.