September 29, 2009

Intel’s Quasi-Virtual Meeting: A First-Hand Report

Just reading through the Fall issue of Carl Hagberg’s “Shareholder Service Optimizer” – chock full of great stuff as always – and Carl has given me permission to post this excerpt based on his recent experience as independent tabulator at Intel’s novel annual meeting (which I previously blogged about):

Your editor has the honor to serve as the Inspector of Election at Intel’s 2009 annual meeting, the first “virtual annul meeting” ever. In an interesting twist of fate, he had testified a few years ago about why a “virtual annual meeting” that had been proposed by a group of vulture capitalists would not work – simply because the proper technology to allow “virtual voting” in a secure and auditable fashion could not then be put into place … at least by that group. So he was already on the record, under oath, as to what would really be required to pass muster. We’re here to tell you that Broadridge has “cracked the code” technologically, but that the meeting – and the technology – was really cool.

Intel, of course has provided a “live” webcast of its meeting in previous years. And they’d also solicited shareholder questions over the web in advance of the meeting. What was totally new, however, was the virtual, on-line, real-time voting feature.

Here’s how it worked: Broadridge closed the voting sties in advance of the meeting in order to establish the quorum and arrive at firm “preliminary numbers”. Then, they reopened the polls – for internet voting only – shortly before the meeting began. As shareholders registered for the live webcast they were asked to enter their identifying numbers (from the proxy card if they were registered holders, or from the VIF if they were street-name holders) if they wished to have the opportunity to vote “live” during the meeting.

While normally your editor does not vote his own proxy if he’s the inspector … to be sort of “super-independent” … he logged on in this case, in order to see exactly how the system was working. A box popped up almost instantly on his computer screen verifying that he was entitled to vote, and providing the spots he’d need to click on in order to make his selections.

As the live webcast began – with a few second delay that was also kind of cool to observe along with the “really live meeting” – the box remained open on the right-hand side of the screen. Since his vote has really immaterial in terms of the outcomes – and since he wanted to see exactly how things would work, he decided to cast his votes midway through.

A new screen popped up to tell him his votes had been recorded … and that he could click again if he wished to change his mind or keep his options open during the course of the meeting, which he did. When the polls were declared closed, the voting screen instantly disappeared, and a message popped up to inform viewers that the voting period had closed. How cool could this possibly be!

Broadridge could not, of course, report the final votes at once: The votes cast at the meeting had to be “run” against the preliminary vote file, to be sure that any earlier votes were revoked by the online vote. And, as backup, Broadridge was able to print out all the details on t he votes cast at a meeting …. And yes, your editor’s vote was among them, as he fully expected it to be. The final tabulation was read by M+2….

…Another concern your editor has expressed revolves around the good-governance aspect of allowing shareholders to ask questions … and the extra preparedness that most meeting chairmen engage in to be ready for them. But Intel’s process assured that this worked fine too – and frankly, the technology is there to let shareholders type in their questions, or to record a statement in advance if they really want to. The meeting chairman alternated nicely between “live” questions and questions from the Internet. And, as Cary Klafter, Intel’s Corporate Secretary told the Society at its annual conference, most of the internet questions – any many of the live ones too – were about products, and had nothing at all to do with “governance” matters … although not every company can count on this, of course.

Note that my title uses “quasi-” before “virtual” as I worry that semantics may get the better of us. Most folks rightly use the term “virtual meeting” to describe what I call an “electronic-only shareholder meeting” (eg. my recent blog about Herman Miller) and Intel did indeed hold a physical meeting – so it wasn’t completely “virtual”…

Allegations of Bad Faith: Mark Cuban Goes for SEC’s Blood

The latest in the Mark Cuban/SEC saga – now Cuban has sued to recoup attorney’s fees and expenses from the SEC, as noted in “TheRacetotheBottom” Blog. As noted in this blog, the US District Court for the Northern District of Texas dismissed the SEC’s insider-trading complaint against Cuban back in July. Man, the SEC’s Enforcement Division just can’t catch a break in the assault on its reputation…

Last Chance for Discounted Rate: Lynn, Borges & Romanek’s 2010 Compensation Disclosure Treatise

Now that we have seen the SEC’s proposals and Congress’ say-on-pay legislation – that will force you to radically change your executive compensation disclosures and practices before next proxy season – we are wrapping up the ’10 version of Lynn, Borges & Romanek’s “Executive Compensation Disclosure Treatise and Reporting Guide,” which we will deliver to subscribers in October.

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If you order by this Thursday, October 1st, you can take advantage of a $100 or more discount. The many of you that currently subscribe can renew by October 1st to also receive this discount. Get the new Treatise hot off the press when it comes out!

– Broc Romanek