Virtual shareholder meetings (VSMs) are often cited as an effective way to expand the reach of a shareholder meeting, and new data from Broadridge Financial Solutions shows the number of VSMs continues to rise.
In the first six months of 2018, Broadridge hosted 212 virtual meetings, up from 180 during the same six months in 2017. The company estimates that it will complete up to 300 VSMs and hybrid meetings by the end of 2018, which would represent a 27 percent increase on the number of VSMs in 2017.
Virtual-only meetings are favored by issuers, with Broadridge anticipating that it will provide 274 virtual-only meetings this year, compared with just 26 hybrid meetings.
If Broadridge’s projections for the rest of the year are correct, the number of VSMs will have more than tripled during the last five years. That period has also seen the trend of virtual-only meetings outstripping hybrid meetings in popularity: in 2014 Broadridge hosted 53 virtual-only meetings and 40 hybrid meetings.
Source: Broadridge Financial Solutions
*2018 figures based on Broadridge’s projections
‘Shareholders can participate by viewing meetings, listening to discussions, asking questions and voting their shares, all with secure technology and without the cost and time to attend in person,’ says Cathy Conlon, Broadridge’s vice president of issuer strategy, in a statement. ‘Companies holding a VSM have shown increased shareholder participation at their annual meetings and this is particularly helpful for individuals who have time or economic constraints, and those who live geographically far from the meeting but would like to participate.’
VSMs are legal in more than 30 US states, with some states carrying restrictions. For example, VSMs are permitted in California if the issuer has received permission from all of its shareholders, in effect ruling out their use. In Massachusetts, private companies are permitted to use VSMs but pubic companies are not. In June 2018 Washington became the latest state to allow public companies to offer VSMs.
Best practices for VSMs
In April this year a new committee co-chaired by Darla Stuckey, president of the Society for Corporate Governance, and Anne Sheehan, former director of corporate governance at CalSTRS, formed to discuss best practices and principles for VSMs.
The committee noted the increase in popularity of VSMs and wanted to raise a dialogue around creating events that are more accessible to a broader audience without jeopardizing shareholders’ ability to ask questions of company management.
The full findings of the committee were released in a white paper, but the best practices outlined are as follows:
- Determine the meeting format before the proxy statement is published
- When considering the format of the annual meeting, the company’s management and board should consider the items to be voted at the meeting – particularly if there are likely to be issues relating to controversial management or shareholder proposals, a proposed M&A deal, company performance issues or a shareholder activism situation
- Evaluate constantly changing technology and process
- Ensure equal access for all participants
- Create formal rules of conduct
- Establish reasonable time guidelines for shareholder questions
- Establish rules for when questions are out of order
- Establish rules to promote transparency
- Post questions received online during the meeting
- Ensure shareowners have access to board members
- Have a technical support line available
- Archive virtual shareholder meetings for future viewing.