TheCorporateCounsel.net

May 11, 2018

Survey Results: More on Annual Meeting Conduct

Every few years, we survey annual meeting practices (we’ve conducted about a dozen surveys on this & related topics). Here’s the results from our latest one:

1. To attend our annual meeting, our company:
– Requires pre-registration by shareholders – 16%
– Encourages pre-registration by shareholders but it’s not required – 8%
– Requires shareholders to bring an entry pass that was included in the proxy materials (along with ID) – 14%
– Encourages shareholders to bring an entry pass but it’s not required – 11%
– Will allow any shareholder to attend if they bring proof of ownership – 76%
– Will allow anyone to attend even if they don’t have proof of ownership – 11%

2. During our annual meeting, our company:
– We hand out rules of conduct that limit each shareholder’s time to no more than 2 minutes – 30%
– We hand out rules of conduct that limit each shareholder’s time to no more than 3 minutes – 35%
– We hand out rules of conduct that limit each shareholder’s time to no more than 5 minutes – 5%
– We announce a policy that limits each shareholder’s time to no more than 2 minutes (but rules are not handed out) – 3%
– We announce a policy that limit each shareholder’s time to no more than 3 minutes (but rules are not handed out) – 0%
– We announce a policy that limit each shareholder’s time to no more than 5 minutes (but rules are not handed out) – 3%
– There is no limit on how long a shareholder can talk (subject to the inherent authority of the Chair to cut off discussion at any time) – 24%

3. For our annual meeting, our company:
– Provides an audio webcast of the physical meeting, including posting an archive – 24%
– Provides an audio webcast of the physical meeting, but does not post an archive – 3%
– Has provided an audio webcast of the physical meeting in the past, but discontinued that practice – 3%
– Is considering providing an audio webcast of the physical meeting but haven’t decided yet – 0%
– Provides a video webcast of the physical meeting (or is considering doing so) – 8%
– Does not provide an audio nor a video webcast of the physical meeting – 62%

4. At our annual meeting, our company:
– Announces the preliminary results of the vote on each matter (unless special circumstances arise such as a very close vote) – 89%
– Doesn’t announce the preliminary results of the vote on each matter – 11%

5. For our annual meeting:
– Our CEO makes a presentation and takes Q&A from the audience – 90%
– Our CEO makes a presentation but no Q&A from the audience – 3%
– We are considering revising next year’s format to eliminate the CEO presentation – 3%
– We are considering revising next year’s format to eliminate the Q&A – 3%
– We are considering revising next year’s format other than the CEO presentation and Q&A but haven’t decided yet – 3%

Please take a moment to participate anonymously in our “Quick Survey on Whistleblower Policies & Procedures” and our “Quick Survey on Political Spending Oversight.”

Also see the transcript for our recent webcast: “Conduct of the “Annual Meeting.”

Board Diversity: Some Progress

This Bloomberg article highlights stories of boards who are achieving some diversity by appointing people who are first-time directors – and who aren’t sitting or retired CEOs. Here’s an excerpt:

Waste management company Republic Services Inc. has been looking for diverse directors since 2011, after a 2008 merger with Allied Waste Industries left it with an all-male board, including one black man. “Change meant bringing people into the waste business who had other experiences,” says CEO Don Slager. “Prior to the merger, frankly, they were just a bunch of garbage men.”

As part of this push, the company enacted some new policies, including a mandatory retirement age of 73 for directors. A variety of experience also was a priority, Slager says. Candidates ideally would bring expertise in areas not already represented, such as logistics and financial reporting. “When you drop a layer below the C-suite, it opens you up to a whole new group of people who are the future leaders of these organizations,” he says.

While the article notes that in 2017, 45% of appointees to S&P 500 boards were novice directors – and a majority of incoming directors were women or minorities – it also states that white men still hold more than 75% of these seats. Not to detract from the companies highlighted as gender diversity success stories in the article – because I do think they’re being thoughtful about this and making progress – but they’ve actually just achieved the “three women” benchmark that Broc’s blogged about…

Age Diversity: Stats on Boards’ “Next Generation”

According to this PwC article, 90% of directors say that age diversity is important – a higher number than gender, race & other forms of diversity. Yet “young directors” – defined as anyone 50 or under – held only 6% of S&P 500 board seats in 2017, and the average age of independent directors increased to 63.

Not surprisingly, the information technology, consumer discretionary & consumer staples industries are the most likely to have at least one director – and technology expertise and active industry knowledge are commonly-cited skills.

Also see this EY report on the traits of first-time directors in 2017.

Liz Dunshee