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Sep 30, 1998

My place or yours?

Judging annual meetings - without leaving the desk

Is the stodgy annual meeting in serious need of an electronic makeover? Companies sick of shelling out tens of thousands of dollars and spending countless management hours for a poorly attended event topped off by the obligatory chairman's lunch certainly think so. That's why adventurous IROs are exploring the cutting-edge possibilities of broadcasting the annual meeting over the internet. For $5-12,000 - the price of taking it online - the event can reach hundreds or even thousands of shareholders worldwide.

Paul Reynolds, development director for MarchCom in Kingston-upon-Thames just outside London in the UK, maintains that with some foresight, the internet annual meeting might be transformed into 'an event that has an effect on the share price.' However, hosting such an event can give IROs a bad case of the jitters. And who can blame them? Coordinating the old-fashioned version is headache enough without the added anxiety of assisting technophobic shareholders as they download the necessary software or making sure the chairman's speech comes across loud and clear in cyberspace.


Lessons from the front

In July the UK's Investor Relations Society decided to test the waters for its members by becoming the first British company to broadcast its annual general meeting (AGM) live on the internet. Being a pioneer was no picnic, recalls executive director Kate Hoyle, who described it as 'a pretty nerve-wracking experience.' But, she adds, 'As it happened, it all worked perfectly.'

Kerry Knoll, IRO for Kit Resources, a Toronto-based gold mining company, also remembers the angst of his company's presenting its meeting on the internet last June. 'Our biggest worry,' says Knoll, 'was what would happen if we can't even get on the internet.' In fact, the presentation ran smoothly, but Knoll says reviews of the event were mixed: 'Some people really liked it. Some wished it had been better.'

Difficulties aside, the case for presenting the annual meeting over the internet is compelling. Online annual meetings are certainly technically impressive. From anywhere in the world, participants can view a live video feed of activities on their computer screens, while listening to the chairman's speech either through speakers or over the telephone. When shareholders in the room vote, shareholders attending online can vote, too.

North American companies from AT&T and Bell & Howell to Barrick Gold, Genzyme, Dell Computer, and Microsoft have all taken the plunge and presented their annual meetings online. Predictably enough, many high-tech names are among the early adapters. When asked why Dell chose to broadcast its annual meeting online, investor relations manager Robert Williams responds: 'The internet is near and dear to Dell and to the direct market.'

Bell & Howell may be the only publicly-traded company on earth that considers hosting an online annual meeting old hat. The company now has three such meetings under its belt, according to Hank D'Ambrosio, VP of administration for the Skokie, Illinois-based company. 'The primary impetus,' he says, 'was to get our message out globally to as many shareholders as possible. The second reason is we like to look at ourselves as a high-tech company using high-tech tools.'

D'Ambrosio is happy with levels of online attendance. In 1996, 400 people tuned in live, he says. The number rose to 1,700 in 1997, then dipped to 1,300 in 1998, a decline he attributes to some of the novelty having worn off. For Dell, while 1,500 shareholders attended this year's Austin, Texas meeting in person, the online version received 8-9,000 hits.

The internet certainly extends a company's reach. During their meetings, Dell fielded an online query from Malaysia and Bell & Howell entertained questions from Japan and the UK. But not all companies are comfortable with opening their doors to all of cyberspace. IROs walk a tightrope between welcoming online participation from shareholders and preventing cyber-hecklers from disrupting the meeting with irrelevancies.

To maintain some control over Q&A, most companies ask shareholders who plan to tune in on the net to register a few days in advance. Unregistered individuals can visit the company's site and replay the AGM later.

Participation is also restricted, de facto, to those who know about the event. Most companies invite shareholders to participate in the internet annual meeting in their proxy or other mailings. In addition, Bell & Howell's proxy materials instruct shareholders how to prepare for the internet meeting by downloading the free RealPlayer software necessary to hear the presentation online.

MarchCom's Reynolds suggests that internet annual meetings might be particularly appealing in Japan, where most are held on the same day to discourage certain investors from actually showing up and giving management grief. Online transmission, he says, may be a way for Japanese IROs to encourage investors 'to see but not to come.'


Expect glitches

The internet has come a long way, but online annual meetings are still a far cry from a Saturday afternoon at the multiplex. 'I'd be remiss to say it's a perfect technology,' says Dell's Williams. 'There are some limitations.' He points out that video transmission is somewhat jerky because the internet viewer sees only a quarter as many frames per second as the moviegoer does.

Some IROs can live with imperfect images but draw the line at iffy sound quality. For this reason, Broadband Associates delivers a system called M.Show, which allows participants to listen to the meeting over the telephone while watching live video from the conference on their PC screens. David McCarthy, of Darome Teleconferencing, the firm that furnished the UK Investor Relations Society's AGM with M.Show, says: 'We don't feel the internet is yet capable of conveying the clarity of voice for a business application. It's fine for chatting with my granny, but not for business.'

Hoyle chose M.Show for the Investor Relations Society's AGM because the telephone is 'a known technology' and therefore provides a greater measure of comfort. Others take a dim view of asking participants to listen on their phones to a silent internet show. Bell & Howell's D'Ambrosio argues: 'If you can do it all on one medium, why have a telephone in one ear?'

At this stage, any internet solution has its trade-offs. D'Ambrosio concedes that a handful of individuals reported bad internet connections or complained of poor sound quality online. Meanwhile, Hoyle recalls that after imagining all sorts of online snafus, the only problem anyone experienced was a bad phone connection from British Telecom which resulted in 'a crackle on the line.'

When choosing a way to broadcast the AGM over the internet, IROs naturally want it to be user-friendly. For M.Show, viewers need simply a PC, a standard browser, an internet connection, and a telephone. Shareholders of Bell & Howell, which uses's (formerly AudioNet's) system, also need a sound card and speakers.


The big picture

For some IROs, the internet annual meeting is only one piece of a much bigger picture. Included in that larger vision is the further expansion of online voting. At an online meeting, the old-fashioned show of hands can be supplemented by electronic polling, with results tabulated and broadcast to audiences online and off. According to Hoyle, near unanimous support for one proposal was reflected on screen in a predominantly red pie chart with a very thin green slice for the lone naysayer, who later confessed to having voted against the crowd just to watch the technology do its stuff.

In the US, many publicly-traded companies are gearing up for online proxy voting. Armando Yslas, director at Georgeson, which has launched an online voting system called CyberVote, predicts that 'as the technology improves, you're going to see more and more of these functions migrating to the internet.' Bell & Howell, for instance, allows registered shareholders to vote their proxies at the company's web site up until the start of the annual meeting. D'Ambrosio says that in 1998 just under 10 percent of shares were voted on the net. Some say net proxies help bring out the retail vote.

Even European companies, which are hamstrung by the legal requirement that all proxy documents bear original signatures, are taking their first tentative steps toward online proxy voting, according to Pierre-Henri Leroy, president of Proxinvest in France. He foresees that by early 1999, roughly 100 companies will be using his EuroVote system to allow their shareholders to view proxy ballots and register votes electronically; individuals will then print up and sign paper vouchers, which they must mail back to the bank.

Many IROs now see online voting and internet annual meetings as inevitable. 'My guess,' says Knoll of Kit Resources, 'is that annual meetings are all going to go that way soon enough.'

Others like Hoyle are waiting to commit. 'I personally took the Investor Relations Society's annual meeting as a one-off event,' she concludes. 'But who knows? Next year, we could be pushing the frontier of technology even farther.'