Our Top-Three 2014 Annual Meeting Horror Stories

Signs Of The Times, To Note With Care, We Say

No matter how well your own Annual Meeting went this year, these three little stories, which your editor and a very distinguished panel of experts shared with attendees at the recent Society Conference in Boston, will surely make you feel even better about it – and mighty grateful that you were not involved.

Two of them have an important element in common - “using the clock” to take the company by surprise, just before the meeting date – and the other provides yet another reminder – to choose – and to monitor your key suppliers with special care these days. All three surely illustrate the importance of our own, oft repeated Meeting-Mantra: “Hope for the best…but always be prepared for the worst.”

• Our first little horror story was mentioned briefly in our last issue, where on a Friday night on the week before their upcoming shareholder meeting a very small analyst and follower of Coca-Cola stock released a report that slammed the stock compensation plan that was up for a vote as being too dilutive. Never mind that Coke had “reached out” to all its larger investors, and that none of the Proxy Advisory firms were saying vote no…or that ultimately, the plan got 83% of the votes cast in favor: Coca Cola officers needed to scramble fast to get their answers out there and to do some damage control: “What a way to make a debut on CNBC,” said our panel moderator, Gloria Bowden, Coke’s Associate General Counsel and Corporate Secretary.
• This next story is one of the oddest, and potentially scariest stories of all as we look down the road for potential new trouble spots:

  Two days before their shareholder meeting to approve a sale of the company, Zale Corporation learned that an official proxy contest had been launched the night before - by none other than Mario Gabelli: He’d filed a proxy statement opposing the deal – and gosh – with the majority of the investors certainly getting the info in time, thanks to e-delivery, the fat was officially in the fire and all the biggest voters were on notice. Several advisors opined that Mario simply wanted to “peek under the curtain” – as official proxy contest contestants are allowed to do – to try to deduce who was voting for and against, and who might be swayable in the final moments – or maybe to induce them to join in a lawsuit to thwart the merger. But one could not rule out the possibility that Mario himself might show up at the meeting with fresh new proxies in hand, to totally turn the tide - as he has done before in our own experience. A happy ending for Zale, they won handily…but what a big jolt of Meeting adrenalin for them!

• How’s this for a jolt of Annual Meeting adrenalin? Your editor got a call from counsel to Ohio-based Cortland Bancorp - who had been referred to him by one of the nation’s top Q&A guys, Broc Romanek, for a “sanity check” on what to do: The bank’s annual meeting was scheduled to take place on the Tuesday following the Memorial Day holiday…But on the previous Friday, the quorum number fell, inexplicably. Calls to the transfer agent, which was also serving as the tabulator, were made – and no one unanswered the phone. The T-A’s website and telephone voting sites were shut down cold…And on Tuesday morning, no one from the T-A showed up – and again, no one was answering the phone. “This will probably be the most unusual 8-k ever filed about a shareholder meeting” he said… “We had to adjourn the meeting, of course, since the existence of a quorum, and the votes themselves are very much in doubt…but we have no idea when we might be able to re- convene.” Turns out that the T-A was Illinois Stock Transfer Company, where the owner had been indicted on Thursday and where the SEC had imposed a total lock-down, with all details under seal until Tuesday…so who knew?? (We did, as it turned out, and were able to tell him that help was already on-site and that all would stabilize shortly.) See “Elsewhere on the Supplier Scene” for more details about IST – but son of a gun, we’d run an article just two issues back, warning readers that in today’s crazy and way over-crowded vendor world, the long-term “survivability” of one’s key vendors has become, we think, a critically important factor, that should be reviewed asap - and with special care.