As annual general meeting season gets into full swing, so do the usual questions about their value. In theory, they give CEOs and other company leaders a chance to meet with mom-and-pop investors face-to-face. But in reality they can turn into boring and frustrating affairs, as proceedings are hijacked by individuals or interest groups with self-indulgent, long-winded or irrelevant questions and protestations.
CEOs wanting to take more control could consider going virtual. According to investor communications company Broadridge, about 250 companies are expected to conduct their meetings via audio or video platforms in 2017, up from 155 last year and just 26 in 2012.
Among them is Duke Energy, which caused a stir last month by scrapping in-person meetings. “The live webcast will greatly increase our shareholders’ access to the meeting, making it easy and inexpensive for them to participate,” CFO Steve Young said at the time.
Saving money is an obvious benefit for hosts, too, and not just regarding the cost of a venue. Shareholders also expect refreshments, perhaps even lunch. Some companies, including Berkshire Hathaway, provide them with a gift.
Detractors argue that virtual meetings allow managers to dodge difficult questions and avoid facing up to protesters. And while big institutional investors regularly get to meet with CEOs behind closed doors, the AGM is one of the few chances for smaller shareholders to observe management in the flesh and have their voices heard. The apparent benefits cut both ways: CEOs could learn a few things, too.
But all that hasn’t stopped the likes and Ford and ConocoPhillips from also deciding to make their meetings virtual-only affairs.
They may have been emboldened in December, when the Securities and Exchange Commission ruled in favor of HP, telling the computer company it could drop a shareholder request to hold a vote on reviving in-person annual meetings.
Of course, a company’s capacity to take things online also could have a lot to do with the views of its largest investors. Some pension funds, such as CalPERS in California, oppose virtual-only meetings. Crossing them could sour relations.
“Companies should hold shareowner meetings by remote communication (so-called ‘virtual’ meetings) only as a supplement to traditional in-person shareowner meetings, not as a substitute,” is CalPERS’ official position.
Few other investors appear to have taken a public position on the issue, though the proxy advisor Institutional Shareholder Services has indicated it may call companies out if they suspect they’re using virtual-meeting technology to muffle shareholder discussion.