April 29, 2021

Virtual Annual Meetings: Handling the Q&A

The Q&A process at last year’s virtual annual meetings didn’t get rave reviews from investors. Companies say they’re better prepared this year, but I’d still suggest you take a look at this article in “The Shareholder Service Optimizer,” which provides some helpful tips on handling the Q&A process.

The article makes several suggestions, starting with including language in your proxy materials prominently welcoming & soliciting shareholder questions, and carefully explaining exactly how they can be submitted and how they will be answered. Here’s an excerpt about what you should do next:

A very good step-two: Invite shareholders to submit questions in advance, via an e-mail to your Investor Relations site. Some institutional investors have pooh-poohed this, as leading to cherry-picked questions and canned answers. But this is the easiest way, by far, for all concerned – and we have found this to be a very good indicator of the issues that are on the minds of the savviest and most interested shareholders.

It’s also a quick and easy way to “get the Q&A ball rolling…and it provides excellent opportunities to have the questions answered by the best-qualified person…which conveys a welcome “openness” to shareholder questions, helps to showcase the management team as a whole and adds much needed variety to the webcast. But this should definitely NOT be the only way you allow questions to be asked.

The article includes a number of other practical suggestions to improve your Q&A period, and concludes by advising companies to commit – up-front – to answering all shareholder questions asked, prior to and during the meeting, and then to promptly post the answers on the investor page of the company’s website.

Virtual Annual Meetings: Mishandling Shareholder Proposals

Shareholder proposals were another aspect of last year’s virtual annual meetings that didn’t always go smoothly, and this recent blog from Soundboard Governance’s Doug Chia provides some advice to companies about what not to do when dealing with a shareholder proponent at a virtual meeting.  This excerpt discusses how companies have muzzled proponents by limiting their ability to talk about their proposal:

This leads me to the stories about issuers’ placing strict substantive limits on presenting shareholder proposals at VSMs. These instances involve issuers dictating what proponents can say:

(1) Requiring the proponent to provide a very short written statement (e.g., 100 words), to be read by management at the meeting in lieu of the proponent speaking in their own voice by phone or audio recording.

(2) Requiring proponent to stick to a prepared script provided by the company, based on the proposal and supporting statement in the proxy statement.

(3) Limiting the proponent to only the exact words of the proposal and supporting statement as printed in the proxy statement… and citing the SEC rules as the source of this limitation.

The blog acknowledges that abuses like these were outliers, particularly among large cap companies. But actions like this also risk alienating investors & making the company a corporate governance poster child – and while companies may not be seeking a governance “gold star” for their virtual meetings, they also don’t want to stand out from the pack in a negative fashion.

SEC Enforcement Chief Resigns

Last night, the SEC announced that Enforcement Director Alex Oh was resigning from the position that she was appointed to last week.  This NYT article provides some background on her decision.  Melissa Hodgman, who served as acting Director prior to Alex Oh’s appointment, will return to that role.

John Jenkins