Tag Archives | virtual

Conoco Virtual Only Meetings Targeted

Conoco’s virtual only annual meeting is the target of a shareholder proposal by the Sisters of St. Francis of Philadelphia. A similar proposal was filed at Comcast. The Conoco resolution has already been cofiled by the Church of the Brethren Benefit Trust and the Needmor Fund, a Walden client.

As responsible shareholders, we believe good corporate governance includes the opportunity for shareholders to meet face-to-face with the company’s Board and management at the Annual Shareholders Meeting.

Tim Smith of Walden Asset Management stated

The decision to move an annual meeting to cyberspace has moved far beyond a minor internal management decision and become an important governance matter for companies. Imagine if companies facing major controversies had decided to forgo physical meetings. If a company faces debate on their comp package or its climate change position or has votes on shareholder resolutions it is also a problem to have a disembodied discussion on line for a  stockholder meeting.

For more views, see Nuns tell companies to get real over virtual AGMs @FT and In Depth: Growth in Virtual-Only Meetings a Concern for Institutional Investors @ Chief Investment Officer.

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Deal Professor: Haranguing

Haranguing

Haranguing

Haranguing – A speech addressed to a large public assembly; a popular oration; a loud address to a multitude; in a bad sense, a noisy or pompous speech; declamation; ranting. A speech before a multitude or on the hustings.

Once again, the Deal Professor blasts gadflies John Chevedden, James McRitchie and William Steiner – this time for haranguing directors at annual meetings. A couple of years ago, Deal Professor Steven Davidoff Solomon equated our activities with terrorism (Deal Professor Equates Filing Proxy Proposals with Terrorism). Last week he wrote that we “make a habit of haranguing directors at corporate meetings.” (Online Shareholder Meetings Lower Costs, but Also Interaction, NYTimes, 5/31/2016).

In an otherwise fairly balanced article on the positives and negatives of online shareholder meetings, Solomon writes, Continue Reading →

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Town Hall Style Annual Meeting – Prepared?

Warren Buffett's Town Hall Style Meeting - Photo from NY Times

Warren Buffett’s Town Hall Style Meeting

Town Hall Shareholder Meetings

It’s a presidential campaign year here in the U.S., and though the election is still over 6 months away, we’ve already been enlightened (or depressed) by a large number of candidate debates and town halls. Whatever your political views, the candidates seem able to instantly recall policy, financial or data details off the top of their heads. Trade figures, funding levels, voting records — their ability to deliver these on the spot, under bright lights and hostile questioning, is an impressive skill.  Continue Reading →

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Fix AGMs: 100 Words or Less

A message from Jim Kristie, editor and associate publisher of Directors & Boards:

Annual meetings can be a frustrating and often futile exercise — in meeting statutory requirements, yes, but not much else as a worthy vehicle for demonstrating corporate leadership and enhancing shareholder relations.


Thus, the cover story for the first Directors & Boards issue of 2011 will be: “What’s Wrong with the Annual Meeting . . . and How to Fix It.” It comes out later this month.

The seed of this idea was planted this past summer when I was a peripheral participant in a study group looking at “Electronic Participation in Shareholder Meetings” — i.e., the pros and cons of virtual annual meetings and the practices necessary to satisfy the needs of all parties. This group was organized by a close colleague, Gary Lutin, through The Shareholder Forum initiative that he chairs.

The virtual annual meeting will be a dimension of the discussion, and possibly factor in as a key fix. And there will be other fixes that we should focus on for recrafting the annual meeting for a coming governance era of heightened transparency and disclosure.

Perhaps you participated in the survey that we sent last month to our e-Briefing audience. The results of that survey will be presented in this cover story.

Whether you participated in the survey or not, I welcome you to hit me with your best idea — in 100 words or less — for what could and should be done to bring the annual meeting of shareholders into the 21st century. Email me at [email protected].

Depending on editorial space, I will group the responses into a “The e-Briefing Readers Speak” sidebar piece of the cover story. Do it quickly, because the article is being wrapped up this first week of February.

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Symantec Reverses Course: Won't hold a Virtual-Only Meeting Next Year

As reported earlier (See Protesting Symantec’s All-Virtual Annual Meeting, 22 Sep, 2010) Symantec Corporation set the pathetic precedent of being the first Fortune 500 company to hold a virtual-only annual meeting without shareowner-approved safeguards to protect participant rights. That happened September 20, 2010. But two weeks later, Symantec has backed down. Responding to a letter writing campaign organized by the United States Proxy Exchange (USPX), which received national media attention, Symantec announced they will not hold a virtual-only annual meeting in 2011. Reuters broke the story.

This wonderful news came on the heals of shareowners’ success convincing Intel to scrap plans to hold a virtual-only meeting in 2010. Intel held a hybrid meeting instead.
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Symantec Audio-Only Meeting Gets National Coverage

At last, there have been a couple of articles in the national press on the Symantec Corp. virtual-only meeting. First, Ross Kerber reported for Reuters, Shareholder meetings via Web mute dissident voices (9/24/2010) Kerber observed,

Soon movies might be the only place to hear pointed outbursts from investors. This year more than a dozen companies moved their annual meeting to online-only settings where they can rephrase or ignore contrarians.

Bruce Herbert, Steve Schueth, U.S. Proxy Exchange, CalPERS and CalSTRS were mentioned as opposing the move. Symantec claimed the fact that it included a pointed question on its performance during the online meeting, provided evidence it wasn’t stifling dissent.

Then on 9/26/2010 the New York Times published Gretchen Morgenson’s Questions, and Directors, Lost in the Ether.

Unlike other companies that broadcast video along with audio, Symantec held its meeting as audio-only — making it impossible for investors to observe the goings-on or see which Symantec executives had decided to make themselves available.

Symantec management read and answered only two questions from shareholders and failed to answer a question from Bruce T. Herbert, chief executive of Newground Social Investment. Morgenson also quoted several Symantec shareowners who were displeased with the audio-only meeting and she focuses on the fact that not all Symantec directors “attended,” although she was unable to find out who the missing directors were.

Morgenson mentioned the recent shareholder forum by Gary Lutin.

PARTICIPANTS in the forum have proposed these standards of fairness involving electronic shareholder meetings: a company should provide all shareholders with a reasonable opportunity to ask management questions relating to director elections and other matters to be decided at a meeting; a company should present those questions or views to management publicly so other shareholders can consider them; and, finally, a company should generate responses to these questions from managers or directors so other shareholders can consider them as well.

Morgenson ended her article with important observations from Lutin.

Most corporate managers also like being able to learn what interests their shareholders so they can respond before decisions are made. But it’s important to be alert to abuses that hide questions. If you want the marketplace to work, investors need to see which managers deserve their support.

Not mentioned in the article is the fact that Glyn Holton, of the United States Proxy Exchange (USPX), initiated the protest against Symantec. USPX appears to be on the threshold of building on the work of Lutin by

drafting a white paper detailing the legal, technology and procedural issues raised by virtual meetings. That will be followed with a members forum through which shareowners will draft shareowner-approved guidelines for the conduct of virtual meetings. Find out more and how you can be involved on our Virtual Shareowner Meetings page.

Long-term, we cannot address the issue of virtual meetings one company at a time. There are approximately 13,000 annual meetings in the United States each year. At some point, the trickle of corporations experimenting with virtual meetings will become a torrent. We need a comprehensive solution.

To that end, the USPX has formed the Coalition to Preserve Shareowner Meetings to pursue a two-pronged strateg:

1. Hold an on-line forum to draft shareowner-approved minimum guidelines for the conduct of virtual and/or hybrid meetings, and

2. Agree to sanctions the shareowner community will impose on corporations that conduct virtual meetings not in accordance with those guidelines.

Aside from Gary Lutin, members of the Social Investment Forum and public pension funds have mostly taken the lead in this area. We need others, especially retail shareowners to step up to the plate. I hope readers of CorpGov.net will join in those efforts by sending concerns and advice to [email protected]. I encourage individual shareowners, institutional shareowners and interested parties to join this newly forming coalition to participate in the forum and other activities. Join the USPX today. Member dues are modest and fund important activities.

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Intel Virtual Mtg Out for 2010 But Exploring Future with USPX

Bowing to shareowner concerns, Intel Corp. scrapped plans to hold an exclusively on-line virtual annual meeting in 2010 and is likely to participate in a Fall conference to establish safeguards for the conduct of virtual meetings in the future, the United States Proxy Exchange (USPX) announced today.

Background

Last Fall, Intel Corp. announced plans to scrap its annual shareowner meeting for 2010 and host an on-line forum in its place. In 2000, Delaware enacted legislation allowing corporations to do exactly this. Sadly, that state’s legislators granted shareowners no say in the matter, leaving the decision solely to the discretion of corporate boards.

Broadridge Financial Services has developed software for the conduct of virtual meetings. A handful of smaller corporations have already adopted that software and switched to entirely virtual meetings. For a number of years, Intel has held hybrid shareholder meetings, allowing people to attend both in person or via the Internet. Their plan had been to go to an all virtual meeting in 2010.

There is every reason to believe that, with strong safeguards, virtual shareowner meetings could enhance shareholder participation in meetings while protecting—even restoring— shareowner rights that have atrophied over the decades. However, no such safeguards are in place. Here are just a few scenarios illustrating how virtual meetings will deprive shareowners:

  1. A well known shareowner activist plans to ask some pointed questions at the shareholder meeting, but his connection to the meeting somehow fails. He is left wondering if he was targeted or if there truly was an honest technical problem.
  2. A shareowner wants to challenge the chair’s conduct of the meeting with a point of order. She is within her rights to do so and may interrupt the chair for this purpose, but she finds that the electronic forum software won’t allow her to do so ….. one more shareholder right lost.
  3. A shareowner wants to make a floor amendment, but the software doesn’t allow that either.
  4. The meeting software provides no means of group communication, such as applause of booing, so shareowners come away from meetings with no sense of how other shareholders felt.
  5. Corporate executives decide to pre-record their comments for a virtual shareowner meeting, including answers to pre-selected “shareowner questions.” The executives then don’t bother logging in during the actual “meeting.”

Most annual meetings are heavily scripted. The chance for real interaction often comes in informal encounters before and after the formal meeting. Those opportunities would also be gone with virtual meetings.

Formation of the Coalition to Preserve Shareowner Meetings

Following the announcement by Intel, shareowners discussed what might be an appropriate response to virtual shareholder meetings. Intel was the first major corporation to announce plans to switch to a virtual meeting, and more corporations were likely to follow suit. Without safeguards in place to protect shareholder rights, the situation was critical. There were few attractive options.

The SEC would be unlikely to intervene to preempt a Delaware law. We could launch a withhold vote campaign against the directors of Intel and other corporations that host electronic-only meetings, but that would entail participating in—and thereby accepting as legitimate—the virtual meetings.

In November, the USPX announced it was exploring a two-pronged strategy to address the issue of virtual shareowner meetings:

  1. Host a conference in the Fall of 2010 to develop safeguards that would allow virtual meetings to be held in a manner that protects shareowner rights, and
  2. Organize a withhold proxy campaign against corporations holding virtual meetings without safeguards.

Since that announcement, USPX has made considerable progress on both aspects of the initiative. A formal announcement of the formation of a Coalition to Preserve Shareholder Meetings is expected shortly. That announcement will include details on the Fall conference.

Conclusion

“The United States Proxy Exchange applauds Intel’s decision to postpone implementing of virtual shareholder meetings until after the Fall conference. We welcome all parties— investors, shareowner advocates and service providers—to join the Coalition to Preserve Shareholder Meetings and participate in the Fall conference, said Glyn Holton.

Interested parties should contact USPX Executive Director Glyn A. Holton at 617.945.2484 or [email protected]. See also, Intel Yields on Virtual Meeting, 1/20/10. I hope to be at this conference myself and urge others to join us.

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Guest Commentary From Glyn Holton: Emergency at Intel

Intel Corp. recently announced they will no longer hold annual shareholder meetings. Instead, they plan to host shareholder forums, or “virtual shareholder meetings.” In 2000, Delaware enacted legislation allowing corporations to do exactly this. Arrogantly, that state’s legislators granted shareholders no say in the matter, leaving the decision solely to the discretion of corporation’s entrenched boards.

There is every reason to believe that, with strong safeguards, virtual shareholder meetings could enhance shareholder participation in meetings while protecting—even restoring—shareholder rights that have atrophied over the decades. However, no such safeguards are in place. Intel and other smaller corporations are taking a go-it-alone approach, forcing virtual shareholder meetings on unhappy shareholders. After Delaware changed its laws, the Council of Institutional Investors wrote the CEOs of all Delaware corporations asking them not to conduct virtual meetings. Unions have expressed concerns. Walden Asset Management has encouraged shareholders to write letters to Intel.

Here are just a few scenarios illustrating how virtual meetings will deprive shareholders:

  1. A well known shareholder activist plans to ask some pointed questions at the shareholder meeting, but his connection to the meeting somehow fails. He is left wondering if he was targeted or if there truly was an honest technical problem.
  2. A shareholder wants to challenge the chair’s conduct of the meeting with a point of order. She is within her rights to do so and may interrupt the chair for this purpose, but she finds that the electronic forum software won’t allow her to do so ….. one more shareholder right lost.
  3. A shareholder wants to make a floor amendment, but the software doesn’t allow that either.
  4. The meeting software provides no means of group communication, such as applause of booing, so shareholders come away from meetings with no sense of how other shareholders felt.
  5. Corporate executives decide to pre-record their comments for a virtual shareholder meeting, including answers to pre-selected “shareholder questions.” The executives then don’t bother logging in during the actual “meeting.”

Most annual meetings are heavily scripted. The chance for real interaction often comes in informal encounters before and after the formal meeting. Those opportunities will also be gone with virtual meetings.

Shareholders have been discussing what might be an appropriate response to Intel’s move, but there are few attractive options. The SEC will not intervene to preempt a Delaware law. We could launch a withhold vote campaign against the directors of Intel and other corporations that host electronic-only meetings. That would entail participating in—and thereby accepting as legitimate—the virtual meetings.

We reject Delaware’s law in the same way abolitionists rejected the Supreme Court’s Dred Scott decision in 1857. A corporation that doesn’t hold shareholder meetings is dead in the same way that a human being that doesn’t breathe is dead. Putting up a website and calling it a “meeting” doesn’t change that.

This is a crisis because the problem is going to spread. Working with Jim McRitchie of CorpGov.netand other interested parties, the United States Proxy Exchange (USPX) is exploring whether to launch a withhold proxy campaign against Intel and other corporations that adopt electronic-only meetings. Under such a campaign, shareholders would refuse to participate in those “meetings” on the grounds that they are illegitimate. Shareholders would withhold their proxies. If enough did so, offending corporations would fail to achieve quorum. Because retail brokers will vote “routine” matters, such as management sponsored resolutions, it won’t be enough for investors to not return their proxy materials. They will have to explicitly ask their broker to withhold a proxy on their behalf.

If we decide to proceed with a withhold proxy campaign, we will implement a web portal through which institutional and retail shareholders may join the campaign and coordinate their activities. At this early stage, please e-mail Glyn Holton to express support or ask questions. We will then keep you informed of developments.

Note from CorpGov.net publisher: See also virtual meetings Virtual Shareholder Meetings by Elizabeth Boros. The USPX aims to be a chamber of commerce, representing the legitimate interests of shareholders and is in the process of getting 501(c)(6) status with the Internal Revenue Code. The board set dues at $9 a month. Membership benefits include advocacy, web-based resources, and a magazine to be launched this Spring. Step up to the plate and e-mail Glyn Holton to become a member.

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