More On Virtual Meetings: We Come Up With A Simple Solution To Activist Objections To “Virtual Only” Formats

Regular readers know that we have been following developments on the “Virtual Only” Annual and Special Meeting front from the get-go, and that we are big fans of the concept – and especially of the big potential money-savings that can be realized.

Yes, we still love the many well-attended meetings we go to – and we know that literally hundreds of companies want to have them, and will continue to have them for years and years to come. And yes, we also know that there are many annual and special meetings each year where investors will want to ask questions, and to “look the management and the directors in the eye.” And we can attest that this opportunity is often a very important and a very effective governance-improving one – and one that can keep the management, and the board, very much on their toes.

But we also know that at well over 12,000 of the roughly 14,000 Annual and Special Meetings that take place each year, nothing significant happens, and there is no earthly reason for even a single investor to attend in person…and most of the time, none do. So for companies like these, the Virtual-Only option can be a big time and money saver – which benefits investors too, who foot the bills.

Several activist investors – and Tim Smith of Walden Asset Management has been in the forefront here – have been saying that Virtual-Only Meetings can enable companies that do have governance issues to hide from investors – or worse, consign them to a “cyber-ghetto” where their concerns will go unheard… which would, of course, be a bad thing.

We tried to convince Tim that getting caught out in such shenanigans is inevitable in today’s E-connected world…and the consequences to a company’s reputation would be so severe they actually serve as a strong self-policing system, but he was not convinced. We also pointed out that Virtual Meetings not only open the proceedings up to an infinitely large number of people – both live and via archived versions – they offer a huge new opportunity to activist investors to reach out to and engage a huge new audience. But he was still not ready to concede that Virtual-Only Meetings were ready for “prime time.”

After much more head-scratching, we emailed Smith with the proposition that “Smaller companies – and even big ones, acting at their own risk of guessing wrong about shareholder enthusiasm for attending in person – and that have only routine matters on the agenda – and that also have a “notice provision” in place, so that no new business can be considered – and that ask shareholders who may want to attend in per- son to give 3-5 days notice, at a minimum, so arrangements can be made to accommodate them – ought to be able to feel that they can safely proceed to have a Virtual-Only meeting.”

Hard to argue with, we’d say…and Tim emailed back that “Certainly, if an investor could ‘register’ that they were attending (many companies do that as you know) a company gets the lay of the land clarified. If you leave the door open for walk-ins, you solve the ‘exclusion problem’ of course.” Case closed, we think.