Tag: Shareholders

‘Intentionally Boring’ Virtual Shareholder Meetings Are Here to Stay

Every spring in the beforetimes, fervent Warren Buffett fans converged in Omaha for Berkshire Hathaway’s annual shareholder meeting. Some 40,000 investors would fly in for the carnival known as “Woodstock for capitalists.” But, like so many large gatherings since March 2020, its past two iterations have been deflatingly virtual.

The video remove didn’t stop Buffett’s event from making headlines in early May: Berkshire’s 90-year-old CEO and its vice chairman, Charlie Munger, spent about three and a half hours fielding questions that shareholders submitted in writing, ahead of or during a webcast from Los Angeles. And with the United States rapidly reopening for post-pandemic life, Buffett ended this year’s meeting by telling investors that “the odds are very, very good that we get to hold this next year in Omaha.”

But most public companies aren’t Berkshire Hathaway—in either party-planning approach or share price. Companies are required by state law to hold yearly gatherings for shareholders to elect their boards of directors; most do so from April through June. The majority of these annual shareholder meetings range from the contentious to the deliberately boring, in what corporate-governance expert Douglas Chia calls “perfunctory exercises.”

Will Shareholders Halt the Inexorable Rise of CEO Pay?

Last year was a terrible one for travel of any sort. You would not know it from the way some American chief executives trousered pay. Annual filings show that Larry Culp, boss of ge, whose jet-engine business stalled as aviation nosedived, earned $73m, almost triple his total pay in 2019. Christopher Nassetta, ceo of Hilton, a hotel chain, enjoyed a 161% pay boost, receiving $55.9m. Norwegian Cruise Line, which described 2020 as the hardest year in its history, more than doubled the compensation of its ceo, Frank Del Rio, to $36.4m. All three were among the corporate titans who grandly took cuts in their basic pay and/or bonuses during the pandemic. They pocketed far more than they gave up.

They did so thanks to a nifty conjuring trick performed in boardrooms across America last year. In effect, many boards airbrushed away the impact of covid-19 on performance-based pay either by removing a quarter or two of bad numbers in order to meet bonus targets, changing the metrics mid-course, or—as with Messrs Culp, Nassetta and Del Rio—by issuing new share grants after the pandemic gutted the previous ones. (Mr Culp and Mr Del Rio also got contract extensions.)

…According to MyLogIQ, a data gatherer, the median pay of 450 CEOs running firms in the S&P 500 that have reported so far was $13.2 million last year, an increase for the fifth year running.

Companies Say They Are Better Prepared to Host Virtual Annual Meetings This Year

Some of the companies that are once again hosting their annual shareholder meetings virtually this year are hoping to improve the experience for investors, many of whom felt muted last year after the sudden shift 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 working to increase interaction with their shareholders, from allowing investors to pose live questions and interact with management, allocating more time for questions to incorporating new videoconferencing tools.

The bulk of annual investor meetings—which take months of preparation—usually is held between mid-April and June. Last spring, many businesses abruptly switched to remote events after lockdown orders and restrictions were put in place to slow the spread of the coronavirus pandemic. The last-minute changes to a virtual format resulted in shorter meetings, fewer direct questions and technical glitches 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 proxy statement through April 22, said they would hold their annual shareholder meeting remotely as large physical gatherings remain restricted, according to data provider MyLogIQ.

The Week in GRC

The Wall Street Journal reported that, according to data provider MyLogIQ, 87 percent of companies in the S&P 500 opted for a virtual AGM this year compared with 23 percent of meetings held remotely in 2019. Companies are finding virtual AGMs to be cheaper and less time-consuming, but some shareholders complain they don’t get as much time to ask their questions.

Remote investor events held by companies in the S&P 500 this year ran for an average of 32 minutes, seven minutes shorter than in-person shareholder meetings in 2019, according to a recent study of more than 90 annual meetings by the Hebrew University of Jerusalem. Executives allocated less time for business updates and for answering shareholders’ questions compared with in-person meetings in 2019, the study noted.

– TikTok said it planned to file a lawsuit on Monday against US President Donald Trump’s executive order prohibiting transactions with the short video app and its Chinese parent ByteDance, Reuters reported. TikTok said it had tried to engage with the US administration for nearly a year but faced ‘a lack of due process’ and that the government paid no attention to the facts.

The Week in Investor Relations

The Wall Street Journal (paywall) reported that, according to data provider MyLogIQ, 87 percent of companies in the S&P 500 opted for a virtual AGM this year compared with 23 percent of meetings held remotely in 2019. Companies are finding virtual AGMs to be cheaper and less time-consuming, but some shareholders complain they don’t get as… Continue reading The Week in Investor Relations

Shareholders Feel Muted as Companies Switch to Virtual Annual Meetings

Companies are finding virtual shareholder meetings to be cheaper and less time-consuming, but shareholders complain they don’t get as much time to ask their questions.

A majority of the companies in the S&P 500 this year have decided to move their shareholder meeting—usually an in-person event—online due to coronavirus-related restrictions on large gatherings. Faced with the option to postpone the meeting until later, 87% of businesses opted for a virtual event compared with 23% of meetings held remotely in 2019, according to data provider MyLogIQ.

Executives and investors usually like that they can dial into these meetings from their homes. But despite the ease of access, shareholders say remote events offer less scope for participation as many companies ask for questions in advance, respond only to a select number of them and don’t disclose how many queries were received.

Corporate Boards Face Cyber Test as COVID Forces Meetings Online

Corporate boards forced to move meetings online during the coronavirus pandemic are trying to guard against cyberattacks with secure communication platforms and instructions for members on notetaking and eavesdropping.

Boards are gravitating to platforms such as Cisco Systems Inc.’s Webex, LogMeIn Inc.’s GoToMeeting, and Microsoft Corp.’s Teams, according to directors and consultants. Nasdaq Inc. has added 2,000 customers over the past few months for its board platform that offers secure messaging and presentation aids, the company said.

The move has forced corporate leaders, often better at networking in-person than virtually, to burnish their technology skills. “Everybody’s online now, including the board,” said Bob Zukis, CEO and founder of the Digital Directors Network, which advocates for corporate governing bodies to add technology experts to their ranks.

Boards are building security into online meetings because the items they discuss, like layoffs and government loans, make them attractive targets for hackers. That’s driving demand for digital portals such as Nasdaq’s and one from Diligent Corp., which offer secure means for discussions and document sharing compared with more-easily-compromised apps.

Investors Put a Microscope on Pay Problems

Companies including Altria Group, CVS Health and Intel are the latest to have failed say on pay so far this proxy season, as investors zero in on longtime compensation issues that have been magnified by the coronavirus pandemic.

Indeed, investors are carefully scrutinizing how pay, strategy and performance will align to weather the storm. Shareholders may react to perceived failings on issues such as employee health and safety by voting against pay to send a strong message, sources say.

Additionally, traditional pain points for investors, such as one-time awards and lack of pay-for-performance alignment, are driving negative vote campaigns that have led to weak say-on-pay vote results for some companies this year.