Virtual Shareholder Meetings Rising in Popularity, Skeptics Remain
Approximately 200 virtual shareholder meetings were held in the past year, of which more than 80 percent were virtual-only meetings, according to Broadridge Financial. Earlier this year, an article in the Star Tribune surveyed the history, rising popularity and pros and cons of virtual shareholder meetings. While proponents of virtual meetings cite cost savings and increased participation, critics argue that virtual meetings allow companies to “use technology as a shield against accountability,” (e.g., by “cherry-picking” which shareholder questions to answer).
Both sides have a point. Accordingly, several major investors have adopted formal policies arguing that virtual meetings should be used only as a supplement to traditional, in-person shareholder meetings, not as a substitute. For example, the Council of Institutional Investors (CII), the California Public Employees’ Retirement System (CalPERS) and the New York City Retirement Systems (NYCRS) have all adopted policies stating that “companies incorporating virtual technology into their shareowner meeting should use it as a tool for broadening, not limiting, shareowner meeting participation. With this objective in mind, a virtual option, if used, should facilitate the opportunity for remote attendees to participate in the meeting to the same degree as in-person attendees.” The NYCRS policy goes the furthest, explicitly stating that “the Systems may oppose all incumbent directors of a nominating committee subject to election at a “virtual only” annual meeting.”
For advice on whether a virtual-only meeting, a traditional, in-person meeting or a hybrid of the two makes sense for your company, contact a member of Fredrikson & Byron’s Securities Group.