First time’s a charm: Chevron’s first virtual annual meeting
Chevron decided to hold a virtual shareholder meeting this year. Had you held one before?
This was our first virtual shareholder meeting. We had discussed it in the past and had always decided against it.
You filed your proxy statement in early April, and announced the potential for a virtual meeting, which you confirmed in mid-April. What preparation was required?
As we approached the date of filing our proxy, it was looking more likely that the meeting would need to be virtual but we weren’t certain, and we didn’t have arrangements in place. We preserved the optionality in the proxy and then about two weeks later it was clear we would be going virtual, which we communicated in a press release.
It wasn’t that radical a shift: our in-person meeting has a lot of security and in-person features: catering, traffic flow, registration desk, seating, and so on, so a lot of that work could be dispensed with. It came down to modifying the script.
How did you approach that?
With an in-person meeting it’s very visible to everyone that your directors and auditors are there. We wanted to adapt the script to make it clear that even though you couldn’t see them, they were with us. We also wanted to be clear about how proposals would be presented. We reached out to all the proponents and asked them whether they’d like to phone in at the appropriate time or submit a prerecorded statement.
Our biggest concern was technology failure and we offered this option so we could test it in advance and eliminate the risk that presenters would be unable to connect during the meeting. All proponents chose to submit a prerecorded statement that we played; then our chairman responded.
How did your board of directors feel about moving to a virtual meeting format? What did you do to ensure directors were comfortable with the technology in advance?
Clearly, under the circumstances we had to do a virtual meeting and the board was very happy we were doing it that way as it considered it an efficient use of time. In our experience we don’t get large shareholders at our meetings, and relatively few shareholders of any size actually attend, so the fact that we were able to reach more people safely and more efficiently was welcome news to our board.
As far as addressing things that might go wrong, I think we did a very good job of thinking expansively in our planning. We pre-identified people who would help for different issues. I made sure the board directors knew in advance who to contact if they had trouble connecting.
Were you concerned about criticism from investors?
Because this was new for us, and service providers for virtual meetings were clearly stretched this year, we went for the plain vanilla version of a virtual annual meeting. I know a lot of investors and governance critics prefer a live video feed to simulate the in-person meeting. I did look at some of the companies whose meetings have a high production quality and they tend to be technology companies where a high-tech video meeting is aligned with their brand offering.
I’m on the board of the Council of Institutional Investors and it takes the position that it will support virtual meetings only if they replicate the in-person experience as far as enabling participation goes. In some engagements with investors, we have been asked for a commitment that we’ll go back to an in-person meeting next year or do a more fulsome production of a virtual meeting. But I think everyone got a pass this year under the circumstances of the pandemic.
Did you notice any change in the attendance for the annual meeting?
We had more than 200 percent higher attendance. Not including employees, we had more than 200 people on the call, whereas we would normally have 50 attendees, at best, in person. We also had some Tier 1 media listening in, which doesn’t normally happen.
How did you approach the Q&A section of the meeting? Many investors have expressed concerns about feeling marginalized in a virtual format, so how did you manage that?
We received more questions than we typically would. We allowed questions to be submitted in advance as well as during the meeting, though we reserved the right to summarize or combine similar questions in the interest of being able to address more questions overall. In total, we answered about the same number of questions that we normally would – more if you include those we posted on our website after the meeting – but they spanned a wider range of topics this year.
At our in-person meetings, we tend to get questions from people who take issue with our company for various reasons. In this virtual meeting, we got questions about our dividend, the outlook for OPEC production, how we attract talent in a downturn, gender balance on our board and other issues.
Our chairman was pleased that we got more business-oriented questions this year. The questions were broadly in line with what we expected and reviewed in the prep sessions we held.
I’m aware that some people have concerns that when companies see questions in advance, they can edit or exclude them in a virtual format. We committed upfront that any questions we didn’t address during the meeting would be displayed and answered on our website. A commitment to integrity guided us, so there were no planted questions, and we made sure that we presented questions on climate change and environmental issues, because they are clearly of interest to our shareholders.
What has the feedback been since the virtual meeting?
Directors were positive about the experience. We’re thinking about how to enhance this if we hold a virtual meeting again. We are keen to get investor feedback and we will weigh that, along with the safety and security concerns, cost and other considerations of holding the meeting when we make a decision on whether – and how – to do our next virtual meeting.
We know that in-person meetings are really important to some people – even if they themselves don’t attend the live event. If we do repeat this, I would like to find ways to make it more evident that our directors are on the line – whether that’s through them introducing themselves, or depicting them visually.
At the moment, we’re still working remotely and we have no line of sight as to whether conditions will be back to normal next year. We really liked the virtual experience and are proud of how we conducted the meeting. It was a lot cheaper and simpler, and we got a lot more participation.
This article originally appeared in the Summer 2020 issue of Corporate Secretary