Companies jettison in-person shareholders meetings to fight pandemic

The annual shareholders meeting is a corporate rite of spring, but it’s under attack this year by the coronavirus and may never be the same.

Scores of publicly traded companies have said they are changing their meetings this year to a virtual format to avoid any gathering that risks public health.

The acknowledged leader in annual-meeting showmanship, Warren Buffett’s Berkshire Hathaway, has announced it is going virtual for this year’s event May 2. Dubbed a “Woodstock for capitalists,” the meeting is really a convention. It fills the largest venue in Omaha, Nebraska.

But most annual meetings are sedate affairs, bereft of news, and some have the feeling of a family dinner people would rather not have. Some can’t fill a conference room at a law firm.

Companies with Chicago-area headquarters such as Boeing, Baxter, Exelon, Northern Trust and Anixter International have said they are going virtual this year. Other well-known companies doing that include Goodyear, Johnson & Johnson and Kellogg.

“These are extraordinary times, and so it is not surprising to see companies undertake this marked shift in how they interact with shareholders,” said Mark Brockway, head of ISS Corporate Solutions. “The question for governance observers is whether this trend represents the new normal — will companies that have made the shift to a virtual meeting format out of necessity continue to do so in future years out of convenience.”

His company is heavily involved in annual meetings because it tabulates shareholder votes on matters decided there, such as board nominations and executive pay. It surveyed 230 public companies March 19 to 25 and found 37% had made their meetings virtual only, with 47% still deciding.

It said a third of the companies that responded are in the S&P 500.

Annual meetings are required by securities laws and most occur in April or May, after companies that are on a calendar fiscal year have put together final reports for the prior year. Shareholders can vote by mail in proportion to how much stock they own, but companies sometimes have minimum share requirements for those who can vote in person.

It can make for highly scripted affairs, although activist shareholders often use the meetings to call attention to lackluster performance, dividend policies or a lack thereof, executive pay, labor disputes or environmental issues. One such activist in the Chicago area was the late Martin Glotzer, an accountant who spoke out on everything from substantive business issues to the quality of the snacks being served.

Making the sessions virtual might deprive a company’s critics of a showcase and make CEOs a little more content with a ritual some would rather avoid.

Sun-Times file