Announcing the second Foxhole of the Year Award for the company that makes it the most difficult for shareowners turn up at their annual meeting. Last year’s winner was Peabody Energy for their choice of Gillette, Wyoming, a town with less than 30,000 residents. Nominations are now being accepted for 2014.
Yuanzhi Li and David Yermack studied the location and timing of annual shareholder meetings in their study Evasive Shareholder Meetings. When companies move their annual meetings a great distance from headquarters, they tend to announce disappointing earnings results and experience pronounced stock market underperformance in the months after the meeting.
Companies appear to schedule meetings in remote locations when the managers have private, adverse information about future performance and wish to discourage scrutiny by shareholders, activists, and the media. However, shareholders do not appear to decode this signal, since the disclosure of meeting locations leads to little immediate stock price reaction. Voter participation drops when meetings are held at unusual hours, even though most voting is done electronically during a period of weeks before the meeting convenes.
Li and Yermack looked at the locations of 9,616 annual meetings held by 2,342 public companies between the 2006 and 2010. Companies held their meetings within five miles of their headquarters 71% of the time. 16% were held between 5 – 50 miles away. That usually makes them convenient for managers and shareowners. Companies with bad news can go to great lengths to keep shareowners away. “We even found one meeting that was held in Siberia,” Yermack says, although it was not included in their sample due to the company’s size.
In the six months that followed the 340 “remote” meetings in the sample, the group of companies’ stock prices under-performed their market benchmarks by 6.8% on average. And after the 46 “exceptional” meetings, the average market under-performance was 11.6%, the study found. “That’s an extremely negative result to be generated as an average,” Yermack says. (Shareholder meeting far away? Bad news could be brewing, The Washington Post)
Through our award, we aim to raise awareness among shareowners of companies that choose to avoid them. Hopefully, the spotlight we shine will lead to more companies just facing the music and coming clean. We have three entries so far from John Chevedden:
Annual meeting of stockholders of The NASDAQ OMX Group, Inc., a Delaware corporation, will be held at NASDAQ OMX’s offices located at Tullvaktsvägen 15, 115 56 Stockholm, Sweden, on May 7, 2014, at 4:00 p.m.
You are hereby notified that the 2014 Annual Meeting of Shareholders (the “Annual Meeting”) of Actavis plc (the “Company”) will be held at the Marker Hotel Dublin, located at Grand Canal Square, Docklands, Dublin 2, Ireland, at 8:30 a.m. local time, on May 9, 2014.
PPL CORPORATION, Two North Ninth Street, Allentown, Pennsylvania 18101, Notice of Annual Meeting of Shareowners, Time and Date: 2:00 p.m., local time, on Wednesday, May 21, 2014. Place: Radisson Blu Hotel, Herald Way, Pegasus Business Park, East Midlands Airport, Derby, England, United Kingdom DE74 2TZ
Foxhole Contest Rules
E-mail your nominations to James McRitchie (click on name) by September 15th. Include the invitation language from the proxy and your reasons as to why your nominee should be declared the winner. I’ll decide the winner and probably a runner-up and will send an appropriate email, certificate or some garbage from my waste can to the winning company’s CEO. Of course, I’ll also announce the winner and runner-up here with some fanfare.
Addendum: I will also entertain awarding the best annual meeting. I understand Johnson and Johnson (JNJ); Easy to get to, convenient time/date, food, comfort, Q&A, headsets for hearing impaired, webcast, podcast, etc. Let’s hear from readers.