Businesses say they are better prepared to host virtual annual meetings this year
Some of the companies that are holding their annual meetings of shareholders again practically this year are hoping to improve the experience for investors, many of whom felt muted last year after the sudden switch to remote technology.
Warren Buffett’s Berkshire Hathaway Inc.,
pharmaceutical giant Pfizer Inc.
and Dutch software and services company Wolters Kluwer NV are among the companies striving to increase interaction with their shareholders, enable investors to ask questions live and interact with management, allocate more time for questions to integrate new videoconferencing tools.
Most annual investor meetings – which take months to prepare – are typically held between mid-April and June. Last spring, many companies abruptly switched to remote events after lockdown orders and restrictions were put in place to slow the spread of the coronavirus pandemic. Last minute changes to a virtual format resulted in shorter meetings, fewer direct questions, and technical issues that prevented some shareholders from voting.
This year, 346 companies, or 86% of a total of 403 in the S&P 500 that filed their proxies until April 22, said they would hold their annual meetings of shareholders remotely, as large physical gatherings remain. restricted, according to data provider MyLogIQ.
Many of these companies say they are better prepared for virtual meetings. Their efforts also come as many investor relations departments look for new ways to connect with more shareholders to deal with the recent surge in individual investing.
“Investors expect state-owned companies to do a better job this year by providing meaningful ways for their shareholders to participate in virtual annual meetings,” said Amy Borrus, executive director of the Council of Institutional Investors, a group investors representing pension funds and other large sub-managers. “Unlike last proxy season, business executives had a year to plan and resolve issues.”
Berkshire Hathaway, which hosted tens of thousands of investors a year in Omaha, Neb., For example, will allocate 3½ hours of questions and answers at its annual event on May 1.
This time frame is unusual, said Miriam Schwartz-Ziv, a lecturer at the Hebrew University of Jerusalem who has researched virtual shareholder meetings. Still, for Berkshire, the 2.5-hour Q&A at last year’s event was less than half the time allotted for previous in-person events, she said. The company did not immediately respond to a request for comment.
U.S. securities regulators are also keeping a close watch, although annual meetings of shareholders are largely governed by state law. “We strongly encourage companies to view virtual meetings as an opportunity to improve, but not stifle, shareholder participation and voting,” said John Coates, Acting Director of Corporate Finance at Securities and Exchange Commission, at a conference last week.
New York-based Pfizer accepted both live questions and advance submissions at its Thursday meeting, an improvement over last year, when questions had to be ranked in advance at the using an online platform. Pfizer also offered a video stream of the president and management team’s speeches, as opposed to the audio-only platform last year, according to a spokesperson. “We designed our meeting to align as much as possible with the face-to-face meeting,” she said.
Last week, Netherlands-based Wolters Kluwer allowed shareholders to ask questions in real time. In 2020, people had to submit questions in advance, with a moderator reading them all during the meeting, CFO Kevin Entricken said.
The move to a virtual format last year resulted in overall shorter meetings with less time for investor questions. Shareholder meetings in a sample of 125 S&P 500 companies in 2020 lasted around 32.7 minutes on average, 17% shorter than the physical event of the previous year, according to a recent Hebrew University study of Jerusalem.
Time allotted for questions and answers fell 16% and businesses spent an average of 2 minutes answering a question, down from 2.6 minutes the year before, according to the study. “The quality of participation in online meetings is very limited,” said Ms. Schwartz-Ziv, the author of the study. “There is no dialogue during an online meeting.”
The companies that provide the technology used for meetings suggest improvements, including better live video feeds and the ability to more easily identify shareholders. “A year later, we’re all virtual meeting experts,” said Sherry Moreland, COO of Mediant Communications Inc., one of the technology providers. “We now know how to use the technology.”
Broadridge Financial Solutions Inc.,
a provider of investment, governance and communication tools, recently overhauled its platform to offer Zoom-like video functionality, better planning instruments and more options for questions and answers. Most of the company’s U.S. customers have moved to the new product, Broadridge said.
Virtual shareholder meetings have several advantages for companies. They cost less and don’t take as much time on executive calendars as in-person events. Hosting the event remotely can also make it easier for more investors to participate.
Some companies are already exploring new formats for communicating with individual investors, including hosting events on Clubhouse, the audio chat app. “We called it a ‘ask me anything’ meeting,” CarParts. Com Inc. CFO and COO David Meniane said. The auto parts retailer said about 2,100 investors and others attended its 40-minute session.
SmileDirectClub Oral Care Company Inc.
plans to host an event through Clubhouse around its next earnings release, CFO Kyle Wailes said. “There are a variety of Q&A sessions that we think work well for other businesses,” he said.
Many companies still have not decided what their events will look like for investors once the pandemic has abated. Some of them plan to return to an in-person meeting, while others plan to host a hybrid or online-only event.
Toy maker Hasbro Inc.
expects to return to a physical event, said CFO Deborah Thomas. “We think this is good practice,” said Ms. Thomas, referring to having a shareholder meeting in person.
—Mark Maurer contributed to this article.
Write to Nina Trentmann at [email protected]
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