Several Serious “Bloopers” In The 2020 Q&A And Voting Periods That Are Very Easy To Fix For 2021

Our good-friend and fellow VSM-reporter Doug Chia recently posted the following, from widely-followed shareholder proponent Jim McRitchie:

“Here’s one for you. I just got off the virtual meeting of [XYZ company - name redacted by the OPTIMIZER since they were far from alone here.] Voting was cut off the second I concluded my presentation requesting better disclosure of political contributions. I submitted a question asking: ‘Why was voting concluded the second I finished presenting proposal #4, leaving no time for shareholders to vote?’  Their response was that it was a “good question” but it “goes to the mechanisms of what we’re trying to do here.” What kind of answer is that? Of course, the impact of leaving people no time to vote is to invalidate the purpose of presenting a proposal. The SEC penalizes proponents if we don’t present our proposal but presenting the proposal is an otherwise meaningless exercise if no one can vote or change their vote based on what is presented. People will listen to you…Talk some sense into them. Why are so many people so complacent about things that make no sense?

Activist hedge fund manager Andrew Shapiro of Lawndale Capital Management quickly chimed in: “I hope you [Doug] are effective at exposing this abuse to more people.”

Calling this an “abuse” is somewhat of an exaggeration in the OPTIMIZER’s opinion: We’d call it a “rookie error” or a “careless error” - most likely due to sloppy cutting and pasting of the script during the 2020 prep period - and of not carefully reviewing the entire “run of show” before finalizing the script. And actually, there were two serious errors here in our book - errors that several other companies made in 2020. And sorry, Doug, your answer, “The fact is that most (almost all?) companies close the polls right after all items of business have been presented” was not on the money either: 

Common sense - and common decency - requires the Chair to ask if there are any questions or comments after each proposal has been presented, to assure a “fair” and open procedure, before moving on to the next item of business - and especially a significant one, like closing the polls. So (1) making sure to ask if there are any questions or comments after each and every proposal is introduced and (2) giving shareholders ‘fair warning’ - and allowing a few, stated number of minutes where holders can change their votes is a hallmark of good governance - especially at VSMs where online voting takes a bit of extra time.

The fact is that this is by far the most common practice at Meetings of Shareholders, and is, indeed, the “Best Practice.”

The best part of all this, however, is that these are very simple things to address when you finalize your Meeting script, and it takes only a few seconds to observe.

Doug also mentioned that some companies {like Intel, he noted] keep the polls open until the end of the second, general Q&A period. While we respect the idea - we do NOT consider this to be a best practice - or even a good one. As we have been saying, writing and explaining to activists for years, the most important order of business at a Meeting of Shareholders is to conclude the “business of the meeting” - and especially the election of directors. This should be the first order of business - so that the Meeting can legally be concluded if the power goes off or the fire alarms suddenly start to shriek. Readers: 

We urge you to review our detailed suggestions for managing the Q&A periods in our previous issue: Go to…https://optimizeronline.com/the-virtual-shareholder-meeting-qa-and-how-to-tackle-it/  …and also to review the article below as well.