Our Detailed Playbook For A Top-Flight Shareholder Meeting In 2022

In light of the hundreds and hundreds of shareholder meetings your editors have attended - and especially in light of the many meeting critiques we have published, covering both the best - and the worst meetings - and the many blunders and bloopers we’ve seen - we have been promising ourselves - and you - that we would produce and publish a detailed “Meeting Playbook.” And as we went about it, we realized we should add a Model “Run-of-Show” - which we feel will be very useful to readers and easy to customize for their own situations - and we also realized that our model “Rules of Conduct” for shareholder meetings needed an update too.

Then, just as we were ready to go to press, came the release by ISS of its 2021 Global Benchmark Policy Survey, which made it clear that Virtual-Only Meetings will be coming in for extra special scrutiny in 2022 - and that ISS will be recommending actions against companies, and their directors, whose meetings fall short of what professional investors believe to be best practices. Here’s an excerpt from the survey:  

“When asked which practices would be considered problematic related to a company’s virtual-only meeting, the top three most concerning practices according to investor respondents were management unreasonably curating questions, the inability to ask live questions at the meeting, and question and answer opportunities not provided. Each of these practices were considered problematic by at least 90 percent of investors. The majority of investor respondents indicated that problematic practices related to virtual meetings could warrant votes against directors. Over one-third preferred targeting the board chair and almost one-third preferred targeting “all responsible directors.” 

Here’s Our Detailed Playbook For Designing And Delivering An AGM That Fits Your Own Situation - And Gets You An A+

The first and most important step in designing your Playbook is the “scoping and mapping phase” - to produce a broad outline of the overall “run of show.” You need to understand the kinds of issues that will be up for a vote, your shareholder demographics - and the concerns and expectations of your expected audience with respect to your Meeting. 

You also need to consider the kinds of “other issues” that might be swirling around come Meeting-time - not just at your company, or your industry, but in the overall economy, in the press, and in society at large that might well “spill over” into your Meeting. Especially important, you need to understand up-front - and plan for the possibilities that the entire mise-en-scene you envision in stage-one might change as you get closer and closer to the event itself, which, of course, would call for any number of needed adjustments and additions - both to the Playbook and often to the supporting cast.

In the simplest of all worlds - and if you are lucky, as is the case with roughly 90% of all shareholder meetings - there will only be the most routine items on the agenda - the election of directors, the Say-On-Pay and the ratification of auditors. In such cases - regardless of whether you plan an in-person or a Virtual-Only Meeting - or a Hybrid Meeting - shareholder expectations for the Meeting will be relatively low. There is nothing much to discuss or ask questions about - and most often, no one but the official “performers” and a few “back-stage stagehands” will show up or tune-in at all. You need to be properly prepared regardless, but the preparations will be fairly simple ones.

If you will have shareholder proposals - where happily you will have ample notice - unless you foolishly agree to allow “proposals from the floor” (please see our warnings on this dangerous proposition on the OPTIMIZER’s website) you will need and want to reach out to the proponents early and make arrangements as to how, exactly, they will present their proposals, and who will do so - and then follow up with them as the date gets closer. Note well, however: the mere existence of one or more shareholder proposals increases the likelihood that shareholders will want to attend - whether in person or virtually - but usually not by much - unless your company or industry has performance issues or has been much in the press.

Next step; study-up on your shareholder demographics - especially if this will be your company’s first shareholder meeting. 

• Institutional investors rarely if ever attend Shareholder Meetings (unless they are proponents, and even then they mostly send paid or volunteer ‘presenters.’) If they do want to come in person, as occasionally they do, they’ll usually let you know ahead of time. At newly-public companies however - and increasingly at seasoned companies too - a few professional investors often tune-in to a VSM, or come by in person if a physical meeting site is convenient for them, simply to get a first-hand impression of the management team. And increasingly, a few very large investors will have a staff member listen in to your VSM, to see if it passes their own good-governance sniff-tests. So doing a half-hearted job of planning and execution - and especially paying insufficient attention to the Q&A process - is not a smart thing to do - and could blow back very badly indeed, as ISS has very pointedly warned.
• Having a fairly large number of individual investors really requires you to take a much deeper dive into your demographics in order to perfect your Playbook - and to avoid being caught flat footed and seriously under-prepared on Meeting day. Companies that have many shareholders near their headquarters - many employees and retirees for example - and many customers (as regional banks and local utilities tend to have) - tend to have much larger than average turnouts. And companies that have long been in existence, and that have “iconic” products and services - and that have many big and loyal fans - tend to draw the biggest crowds by far (think Berkshire Hathaway, Disney, Starbucks and WalMart, for example - but also think of the many newly-public companies that suddenly become the rage with Gen-X and Gen-Z investors.)
• Gadflies, governance gurus and the press have also been “making hay” at shareholder meetings, and making noise about poorly managed VSMs with increasing frequency - increasingly searching out examples of really bad meetings - and occasionally, good ones too, as we try to do at the OPTIMIZER. There is a very real risk these days that your company’s meeting will be singled out for a scathing naming-and-shaming in the press - to be followed next year with votes against directors - which is to be avoided at all costs, we say.

With this preliminary homework out of the way, the next step is to review your meeting options with regard to “location” - and to decide on a venue, an agenda, and the technological tools - including potential bells and whistles that are the “best fit” for your own company this coming year - and that, ideally, answer the demands of your institutional investors. 

• The easiest and least expensive route, by far - IF your company fits the bill - is what we call an “In-Person-Only Meeting With Strong Keep-Away Provisions.”  If you expect to have no more than a dozen or so “company people” at the meeting - including officers, directors and support staff - you can use a company conference room, or your local counsel’s - and limit the number of outside attendees to a dozen at most - shareholders only - without the risk of ticking anyone off. Since “keeping away” is still a very good idea as there are still so many un-vaxed people out there - plus there’s “the Delta virus factor” - we say, consider requiring proof of vaccination for all attendees, and consider mandatory masking too, for the safety of all attendees. Plan to have directors and most of the senior officers attend via a conference line, to get down to a small core of in-person Meeting participants - the Chairman, CEO, CFO, Corporate Governance Officer and the IRO - plus a “technician” and maybe a videographer if you are broadcasting live video). The Inspectors of Election - and the outside auditors can attend via a conference call too - which saves space in the meeting room - and their travel expenses too.
• For companies that want to play it safe in every way, however - and to meet the growing interest in attending “virtually” - a “Short but Respectful and Shareholder-Friendly Virtual-Only Meeting” is still the best bet for most companies in 2022. Here too you can use the same small cast of characters to conduct the meeting - with officers, directors, IOEs and auditors on a conference line. Shareholder proponents can be given the option of pre-recording a statement (which helps them big, we think - to sharpen and polish their message and to stay within the time limits without rushing) or presenting their proposals live, via a conference line - which the vast majority of them have been opting to do…saving ‘presenters’ fees’ and travel time for them as well, vs. an in-person-only event. Best of all, for the overwhelming majority of public-companies - with no big issues and no big hordes of  fans wanting to attend in person - the meeting can be “short - and respectful - and shareholder friendly”…and all in all done in a mere half-hour or so…without skimping on time or cutting any corners.
• For the 200-300 or so companies that WANT to have a meeting that compares favorably to their old and robust and well-attended and ideally “celebratory” in-person event - OR that have a lot of “issues” that will likely generate a lot of questions that warrant a robust airing - we say, plan to have a “Fulsome and Technologically-Robust VSM” - one that tries hard to replicate an “in-person experience” - which can, indeed be done, as our Playbook will try to demonstrate.
• As to Hybrid Meetings - we say, “If you have a lot of issues that warrant a ‘fulsome airing’ - and if you have really tried hard to replicate an in-person experience ‘virtually’ - and if it is safe to hold an in-person Meeting for say 25 or maybe a few more people - MAXIMIZE AND OPTIMIZE your already considerable time and effort by offering shareholder both the virtual and in-person options. (Big fans of Hybrid Meetings that we are in principle, we must note, however, that this really requires a great deal of time, a fairly large array of technologies and much-increased attention to detail - to smoothly toggle between live and virtual sites - to pull it off successfully…So be sure that the game will be worth the candle…and work extra hard on that Playbook - and do bear in mind that the larger your company is, the closer your big investors will be watching, and taking notes, and maybe planning votes-no on directors next year).
• Most important we say, start preparing early - and be sure to vet and choose all of your potential service and technology suppliers with special care this year, bearing in mind that there are few if any that can supply every bell and whistle you may need without hiring some outside sub-contractors. Given the warnings from ISS - and from big investors in general - the “best-in-class service suppliers” - and their key suppliers - will be much more in demand than ever in 2022.

Now for the Playbook Itself:

• First and most important, it should be a fully-written-out and carefully annotated script - ideally color-coded - with large, easy-to-read type and clearly written cues for all participants - with color-coded speakers’ and technicians’ names - and with easily accessed text to be used if speakers are out of order or if an unexpected event arises - like a fire alarm or some other “disturbance” to the performance as a whole.
• Like all good performances, the “play” - and the Playbook - need to have a “Director” - a “Meeting Moderator” we would urge - whose job is to keep the entire production “moving” and on schedule. The most successful and satisfying VSMs we have listened in on this season and last, have used the Investor Relations Officer as the moderator - to go over the agenda and ground rules, then tee-up the official business portion - to be run by the Corporate Governance Officer or Corporate Secretary - and then to vet and tee-up and ask the shareholder questions that have been sent in over the app or in advance - and to call on shareholders whose are “in the queue” if a call-in feature is  provided - and then to allow the Chair to answer. Even better, we say, is to have the Chair - or the IRO - call on the CEO, the CFO, or a Director or another senior officer to answer, as he or she deems most appropriate. (Here, it is especially smart to have a few questions teed-up in advance - and to decide ahead of time who would be the best person to answer. This gets the Q&A portion off on a good note, greatly adds to a more “in-person feel” and allows time for the moderator to review and properly tee-up, and sometimes combine Questions that have been sent in via the Meeting app.)
• Special attention must be paid this year to the handling of both Q&A periods. Please see our sample “Run of Show” and our Revised Rules of Conduct, below, for our advice on best practices here. Bear in mind that institutional investors are demanding that there be opportunities for a dialog with shareholders and NOT a pre-scripted or entirely pre-recorded set of answers to pre-selected questions.
• We also suggest that script-writers begin with and pay special attention to “Meeting Etiquette” (see our articles on this: “Meeting Etiquette “ | Optimizer Online )
• Successful Virtual Meetings also require a highly skilled “Meeting Manager” - to manage and coordinate all of the technological “bells and whistles” a good Meeting should have and to be sure that they will be promptly and smoothly launched - such as slides, opening music, pre-recorded audio/visual sections - both prior to and interspersed in the Meeting itself - plus all of the necessary telephonic systems and equipment and other “Meeting-Apps.” In the ideal world, and to best achieve a “live and lively in-person-like experience” your Meeting will incorporate apps like Zoom, Go-To-Meeting or Google Meet. Do not leave the “management job” solely to outside service providers, we say - many of whom, quite understandably, have no clue as to what a shareholder meeting is “all about.” You really need a fairly senior and experienced staff member to follow every aspect of the Meeting - and to jump in immediately if anything goes off-track.
• The script should be carefully vetted by all of the “performers” of course - and by the entire Meeting Team - and reviewed one final time, well before the Meeting begins, to assure a smooth and seamless and “glitch-free” “Run of Show.”
• The script, and of course the Meeting as a whole, should closely follow the formal Agenda and the Official Rules of Conduct - which, ideally, will be made available to early-attendees, and to all others on demand, with an easy to find and reliable “click.” (A sample Run of Show - along with a few brief comments on best and worst practices - will be found below. Our sample Rules of Conduct - which should always be “tweaked” to the circumstances surrounding your company’s Meeting - can also be found below) 
• Special attention should be paid to any and all of the technologies and “tech-support” systems that could potentially “go down” - and what to do and say in each such case. (If a shareholder proponent fails to call in, or accidentally hangs-up, the Chair, or better, the Meeting Moderator, should have a short script to introduce the proposal. If a scheduled management speaker experiences “technological difficulties” either the Chair, or the Meeting Moderator should quickly step up to ‘cover.’ If power, and/or the Internet connection is lost, the tech-provider should be prepared to post a notice on home-viewers’ screens, with info on what to do - and with periodic updates as needed.)
  See The Biggest VSM Blooper To Avoid: Lost Connectivity
• Be sure to include the Inspector(s) of Election in the review: The best of them - which you should aim to have on your Team - have been to many shareholder meetings and will very often be able to offer suggestions on additions, deletions and refinements to the script - and to the overall Run of Show - that will smooth, and often speed things up - and that will assure the Meeting will be run with scrupulous fairness to all involved…which actually is, or should be, part of the Inspector’s job.
• Formal dress-rehearsals with “all hands on deck” are a must for a smooth and seamless Meeting. An important part of the effort here is to “time” the meeting - and to tweak all the parts to fit the times allotted - and to note them in the final script - so all the players will be ready when their time comes to speak - and to finish speaking.
• At least one of the earlier rehearsals should be devoted to all of the “tech support people” - to be sure they know exactly what time they are likely to be called upon, and what, exactly, they need to say and do - like “roll the tape” for pre-meeting items (like music, or an audio-visual presentation); for all pre-recorded segments - and with clear cues to bring up each slide. Telephone and conference call providers need to open and close the microphones as appropriate - both for official participants and proponents - and to allow directors or senior managers to participate as warranted - and ideally, for call-in questions to be asked and answered.
• All of the tech support people should be present for the final rehearsal - and special attention should be paid to the Q&A session - and to the way questions will be received, selected, teed-up and fielded during the live event.