May 16, 2012

Can – and Should – Companies Close Shareholder Meetings to Journalists?

As I blogged recently, journalists have been asking me if they can be shut out of an annual shareholders meeting. The answer is “yes” if state law allows the company to only admit shareholders as of the record date into the meeting (which I believe most state laws do). This type of restriction typically is disclosed in the company’s proxy statement. Here is one example of such a disclosure:

Attendance at the Annual Meeting

You will need proof of ownership to enter the Annual Meeting. If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to attend the Annual Meeting, you must present proof, such as a bank or brokerage account statement, of your ownership of common stock as of March 1, 2012, to be admitted to the Annual Meeting. At the Annual Meeting, representatives of the company will also confirm your shareholder status. Shareholders must also present a form of personal identification to be admitted to the Annual Meeting. NO CAMERAS, RECORDING EQUIPMENT, ELECTRONIC DEVICES, BAGS, BRIEFCASES, PACKAGES OR SIMILAR ITEMS WILL BE PERMITTED AT THE ANNUAL MEETING. This is permitted under state law.

I checked in with independent tabulator Carl Hagberg who noted:

Although good practices dictates that companies allow journalists if they want to foster good relations with the media, etc., it depends on the company. And for some companies, it depends on the year (some years they allow journalists or don’t even guard the door that closely – and for others, they are strict, probably because of some controversy brewing).

It’s been a long slow trend towards closing the meetings to journalists. In the old days, the media had a special breakout room, etc. I haven’t heard of that much anymore – plus now everyone is treated as a potential journalist (as reflected in the all caps language in the proxy statement excerpt above). A few hundred companies webcast their meetings and those obviously are very accessible.

My ‘educated guess’ is that most large companies – and most smaller ‘community-oriented and consumer-oriented companies’ too – still go out of their way to welcome the media. A few of the larger companies still sort of ‘confine them’ to a “press room” with an A-V feed. And less than 5% officially exclude them.

The problem with exclusion is the natural – and usually well-warranted assumption – that companies that won’t admit the press have (or foolishly feel) they may end up having “something to hide” that comes out in their meeting. Nothing tends to draw more interest from the press than circumstances like this – and ironically, it usually serves to make any news stories much more juicy and much more prominent than they would otherwise have been. Learn more about this topic from my meeting admission criteria article.

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