Will ‘Big Brother’ Really Be Looking At Your VSMs This Year?

We have been reporting on comments from ISS - and from several large investors as well - that they would be monitoring Virtual Shareholder Meetings to assure that shareholders will have a meaningful chance to ask questions - and to “engage in a dialogue with management” - and will consider voting against some or maybe even all directors in 2023 at companies that fail to meet these objectives. So - as the 2022 ramps up fast, we reached out to a number of people to test the wind.

We started with our old friend Tim Smith, Director of ESG Engagement at Boston Trust Walden Company, who has been introducing shareholder proposals in person since the 1970’s - and who invariably acts as a “big brother” in the best sense of the words, urging companies to follow their better natures in dealing with shareholder matters. “Yes, big investors will be monitoring and reporting on VSMs this season,” he said, “but not as a ‘penalty stick’ this year” he thinks.

Next, we reached out to James McRitchie, who, aside from submitting 80 shareholder proposals of his own this season (many of which are ‘settling out’ he noted) and also coordinates with and shares info with proponents As You Sow - and with John Chevedden. McRitchie routinely fills out forms on VSMs using an online system provided by the Interfaith Center on Corporate Responsibility (ICCR) and the Shareholder Rights Coalition, with about 48 boxes to check. It also includes extensive additional space to gather statistical info about meetings and for respondents to provide fairly extensive feedback - where, McRitchie notes, ICCR “maintains a database for use by Miriam Schwartz Ziv and other academics.” He plans to monitor and report on as many meetings as he can this season - and we will plan to fill out the ICCR forms too, for the meetings we plan to monitor. 

Check out the IRRC website for their 9-point statement on VSM best practices –  Shareholder Participation and Virtual Annual Meetings During the Coronavirus Crisis | ICCR (Interfaith Center on Corporate Responsibility) - and take a look at the extensive questionnaire for 2022 Virtual-Only Meetings. We also heard from Nadira Narine, the Senior Program Director at ICCR, who said, “We are tracking experiences of our members with VSMs and I’m happy to share with you. So far, no big issues have been brought to my attention, but most meetings are ahead.”

We also reached out to the overseer of stewardship strategies at CalSTRS and to ISS, where we reached out via their website, neither of whom have gotten back to us as we went to press.

Our conclusion: Yes, big investors will be very actively monitoring VSMs this season, as we will do too.  But the main cudgel will come from the public “naming and shaming” of companies that fail to provide robust opportunities for shareholders to be heard, and where companies fail to allow a meaningful dialog between management and investors. Please DO bone up on our best-practice tips for fostering dialogue - and on the ICRR guidelines too… And stay tuned for more and more focus on meeting practices.