With the coronavirus outbreak now recognized as a global pandemic - and with Annual Meeting Season well upon us - all of us involved with Annual Meeting planning need to take note of the top advice from health experts around the world: To avoid large and potentially crowded events.
Next, all of us involved in planning and serving at the meeting need to get going, as soon as possible, on ways to make that happen.
The advice to stay at home (which may well become forced on many company meetings by local authorities as events unfold) should be featured prominently, and as the first order of business after announcing the date and time in your Annual Meeting materials, we advise.
It should be followed by advice as to whether there will be a physical location for the meeting this year - along with another mention of how important it is for shareholders to consider staying at home - and to cast their votes early, whether by mail, over the internet or by phone.
Currently, there seems to be a bit of confusion as to the difference between “Virtual Meetings” and “Virtual-Only Meetings” that urgently needs clearing up:
Hundreds and hundreds of U.S. companies have been providing “virtual access” to shareholder meetings via online-real-time webcasts that shareholders can tune into via their personal computers, laptops or mobile devices - or by phone. This is a very easy and inexpensive thing to arrange for, and no regulatory permissions are required.
Virtual-Only Meetings are currently permissible for companies incorporated in 30 states. In all such cases, however, shareholders must be able to vote their shares online during the course of the meeting.
Currently, Broadridge is the only proxy tabulator that can provide this service to street-name holders, so they will need to be your first point of contact if you wish to consider a Virtual-Only option.
If your company’s meeting must have a “physical site” the next order of business should be to work on limiting in-person attendance as much as possible. Here are some ideas to consider:
- Directors (many of whom come under CDC guidelines that people over 60 should only fly when absolutely necessary) and company officers, other than the Chairman and the Corporate Secretary or Governance Officer - should be encouraged to attend “virtually” rather than in person. We would urge that each director and senior officer be introduced, and should say hello, or good morning, or “happy to be here” to confirm their attendance.
- Companies who must have physical meeting sites would be well advised - and well within their rights, we believe - to limit attendance to a specific and pre-announced number of stockholders only - with no guests permitted. If you have already reserved a site, as most companies do months in advance, we would suggest leaving ten to 15 feet between the dais and the videographer and the audience. Then calculate the number of seats there will be if you allow the recommended six feet between each attendee.
- You would also be wise to require pre-registration, with an automatic notice to holders once the designated seats are taken.
- Shareholder proponents, if you have any, should be given priority admission status if they wish to attend a meeting with a physical site - which we think will be a rare phenomenon this season. But, as always, you should reach out to them early as to how they would like to present their proposal, or have it presented for them. Many shareholder proponents are perfectly happy to present their proposal over a phone line, or to have the Chairman do it for them.
- Support staff: Limiting attendance will, of course, limit the support staff that will be needed to greet and check-in attendees. And here too, we would urge that shareholders stay 6’ apart on a roped-in check-in line. Be sure to offer sanitary hand-wipes, we’d urge.
- Light refreshments should be available prior to an in-person meeting, we think - if there is adequate assembly space outside of the meeting hall. Refreshments should be available for a shortened period this year, and limited, we’d suggest, to pre-packaged and sealed water, juices, cookies or pastries. Our own preference would be to have coffee and tea served to us in disposable containers by servers wearing gloves.
- “Live questions” at physical meeting sites must be in order, and entertained we believe - and here we would recommend that if at all possible there be six feet of distance between questioners and an attended microphone location - or if not, that questions would be submitted in writing and read out by a staff member or by the Chair.
- Voting at the meeting: We would advise that any proxy cards, VIFs, ballots and Legal Proxies be placed by shareholders themselves in a ballot box, located at a central point in the meeting space - and that smart tabulators and Inspectors of Election will, out of an ‘excess of caution,’ be wise to consider wearing rubber gloves when examining and processing them.
- “Virtual Inspectors of Elections”: Inspectors of Election can, and often do attend shareholder meetings “virtually” - via a conference call. Among the best practices are to introduce the Inspector(s) and have them confirm that a quorum is present; to explain in the script what will be done with proxies and ballots if there IS voting at the meeting [if there are relatively few items they can be scanned front and back and forwarded immediately to the Inspector; if there are many items they should be “overnighted” to the tabulator] and when the Final Report will be available on the company website. If there is little or no voting at the meeting the Inspector, or the Chair, can and should announce that all director candidates have been elected, and report on each other item as “approved” or “not approved.”
Regardless of whether you chose a “Virtual” or a “Virtual-Only” meeting, we urge companies to stress the importance they place on the Annual Meeting, and on shareholder involvement and participation.
- Strive to make the “virtual components” as attractive as possible -and to make it seem as much like an in-person meeting as possible, we advise - by providing not just audio but video coverage of the proceedings, including at a minimum, a few slides and/or photos to keep the viewers’ interest engaged.
- We would also encourage companies to solicit stockholder questions in advance via a link to an investor website, or by sending a scan or fax to the IR or Governance Officer’s attention.
- Commit to answering all shareholder questions - whether during the meeting as reasonable time limits permit, or by posting a post-meeting summary on the investor page.
- Ideally in our view, as part of a virtual meeting, companies will allow shareholders with questions to queue-up and ask them in real-time - on a first-come, first-served basis via a toll-free dial-in line.
Actively addressing the issues raised by the coronavirus is no longer an “optional activity.” And time is of the essence here. But fortunately there are ways to respond proactively to the challenge - and to assure a smooth and successful - and safety-conscious meeting day.
Please feel free to contact the author if you have any questions or comments: cthagberg@cthagbergllc.com.
About the author: Carl Hagberg, the senior-editor of The Shareholder Service OPTIMIZER, now in its 26th year, has been attending and writing about shareholder meetings for over 50 years. As the managing partner of CT Hagberg LLC, Carl, and a team of 50 Independent Inspectors of Election, serve at over 500 shareholder meetings a year - including many “virtual” and “virtual-only” meetings. Carl was the author of a booklet published by Broadridge in 2019, “How to make your annual meeting day run smoothly and successfully” - which has been downloaded to date by several thousand corporate officers.
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