May 15, 2020

Contested Virtual Shareholder Meeting – It’s a First!

We’ve blogged quite a bit about virtual annual meetings and here’s another development – a recent Wachtell Lipton memo discusses the first contested virtual annual meeting – it took place at TEGNA Inc. The memo reports the company’s nominees were re-elected and the bottom line message is that a contested virtual meeting is an option.  Given the stakes involved with a contested meeting, the memo includes practical considerations to keep in mind if you find yourself navigating a contested virtual meeting:

– Customization may be required for the virtual meeting platform: this may necessitate help from outside service providers

– Conduct dry runs with cross-functional teams: include IT, legal, outside counsel, proxy solicitors, public-relations advisors

– Coordinate with inspector of elections in advance: alternative means of communication with both parties will be needed, determine process for submitting all proxies & ballots before polls close

– Ensure both parties understand rules and processes

The memo also discusses whether virtual shareholder meetings provide more opportunities than in-person meetings for shareholders to vote by ballot and split their votes between company and dissident director-nominees. Activists have long called for “universal ballots” that would allow shareholders to “mix and match” votes.  For now, the memo says because virtual meetings are easier to attend than in-person meetings, maybe they provide more opportunities for shareholders to mix and match their votes.  But, whether the meeting is virtual or in-person, it’s still a bit of a process to vote by ballot.

It’s Proxy Season, Plumbing Needs Some Attention

Last week, John blogged about some issues investors have run into this year with virtual shareholder meetings – noting too that Doug Chia is keeping a diary of his virtual shareholder meeting experiences.  Doug’s notes from an experience at one shareholder meeting makes it painfully obvious the patchwork of proxy plumbing needs some attention.  Here’s an excerpt:

Knowing you need a control number to enter any virtual annual meeting, I asked my broker for the control numbers I would need to attend the virtual annual meetings of a bunch of companies, including Danaher.  It turns out my broker gave me the control number to vote my shares in advance of the meeting, not the control number to attend the meeting. Nope, they’re not the same, at least not for this particular meeting.

What I needed to do to get the meeting attendance control number was go through the steps to (1) ask for and get a legal proxy from my broker, (2) scan and email it to the transfer agent at least six days before the meeting, (3) watch for an email back from the transfer agent with the control number, and then (4) use that number along with the password listed on the notice to enter the meeting site on the day-of. I assumed that if I asked my broker for the control number, they’d be able to just get it and save me the hassle. (“When you assume….”)

So, is what I’m saying that this so-called “plumbing” system is such that if Mr. & Ms. Main Street hold shares of a company through a broker, which most people do because most people buy shares through a broker, then they’ll always have to jump through all of those hoops I described above just to attend the one meeting the Streets have the legal right to attend? The answer is… it depends!

The experience will vary depending on a company’s service providers to no fault of the service providers.  Doug says that the process will be different for different meetings because using different combinations of vendors can result in different processes being necessary to get into these virtual meetings.  Maybe it’s time proxy plumbing gets some needed attention…I prefer not to call in the plumber but this year’s annual meeting process is bringing this issue back to the fore.

As a point of contrast, Doug posted notes from his experience at Intel’s audio-only meeting – Intel has held virtual-only meetings for years and it sounds like they’ve got the process down pat.

PPP Safe Harbor Extended Until Monday!

It turns out the SBA wasn’t done Wednesday when they issued FAQ #46 “clarifying” the safe harbor for returning Paycheck Protection Program funds.  Sometime later in the day, the SBA added FAQ #47 extending the PPP safe harbor until Monday, May 18th.  A little more time for companies to think over whether to return the funds …

– Lynn Jokela