Q&A Blog Series: Recommendations for Replicating an In-Person Shareholder Meeting Virtually

Publicly listed companies rapidly adopted virtual shareholder meeting (VSM) technology in 2020 as the proxy season collided with the onset of the COVID-19 pandemic. With the 2021 proxy season approaching, some of our Mediant executives—Sherry Moreland, President and COO; Stacey Robinson, CISO; Chris Nobles, CTO; and Jean Luther, Director of Compliance—share their insight and recommendations on how issuers can hold a successful VSM this year.

Q: What happened with VSMs in 2020?

Sherry: Publicly listed companies have been exploring VSM technology for a decade, but the COVID-19 pandemic meant digital events became the only option. Not surprisingly, the number of VSMs exploded. Just think about the pressure that issuers were under—one moment they were getting their materials printed and out the door and the next they were reinventing shareholder meetings with unfamiliar digital platforms.

Some investors welcomed the change. Remote access is far less costly than traveling to a physical event, while the flexibility of VSMs enabled some issuers to boost engagement and give more time to Q&As. Unfortunately, not all shareholders had this experience.

Q: A coalition of investor groups wrote to the Securities & Exchange Commission (SEC) to highlight some problems with VSMs. What changes do they want to see?

Sherry: The pace of transition from in-person to digital meetings caused some issues. Investor groups acknowledged the challenges facing issuers in 2020, but for 2021 they quite rightly expect the industry to learn and improve.

The groups’ key concerns expressed to the SEC were difficulties for beneficial owners’ accessing meetings, poor management of Q&As, a lack of meaningful participation throughout meetings, and inconsistent levels of responsiveness and transparency among issuers.

Investors want the quality of experience they’re used to receiving in physical meetings replicated at digital events. They also want best practices to be adopted across the industry.

Q: How has the proxy voting industry responded?

Jean: Efforts to raise standards were underway before the pandemic and have since accelerated. Mediant is fully behind this. We were part of the multi-stakeholder group of listed companies, investors, and proxy service providers that met to discuss VSM standards in 2018. Last year, we joined a broader working group that is focused on the goal of replicating in a VSM what is traditionally available at an in-person meeting.

Q: Mediant has recommendations for issuers hosting VSMs this year that involve technology, shareholders and common standards. Can you explain?

1. Get to grips with the technology.

Chris: If executed well, VSMs do not have any drawbacks. Although different than a physical meeting, issuers can still be engaging and reach far more shareholders. Unlike last year, issuers have time to explore the capabilities of VSM platforms and prepare to deliver the best possible experience for shareholders this proxy season.

I think having all speakers on camera is a good practice to follow as this really brings a meeting to life. I also think setting a meeting agenda that is interactive and gives directors clarity about what to communicate is another good practice in addition to rehearsing back-and-forth dialogue to ensure its engaging. Crucially, companies should advise shareholders how their questions will be managed. I’d urge them to use VSM tools that allow live Q&As.

2. Make sure shareholders have a voice.

Sherry: Investors attending in-person shareholder meetings can ask questions with minimal difficulty and that can also be achieved at a virtual meeting. Some companies did a great job in their VSM last year by having a transparent process for submitting questions and making them visible on a real-time basis. 

Chris: We designed our VSM platform, MIC Digital Shareholder Meeting (DSM), to enhance the shareholder experience. Issuers can send alerts about proxy materials in advance of meetings, they can deliver a prospectus via text or email, or push it out through a broker-dealer’s app. Questions can be handled through advance submissions or live during the meeting via our platform's chat feature.

Voting can take place over multiple channels, including email and text. Shareholders can tap on a link and see all relevant information before executing their proxy vote or corporate action election directly from their device. You can even vote over Alexa.

3. Push for common standards.

Jean: The loudest complaint last year concerned the difficulty beneficial shareholders had in accessing virtual meetings. The End-to-End Vote Confirmation Working Group, of which Mediant is a member, was formed to find a solution. Collaboration between industry players will be the route to achieving this and we’re proud of the role we’re playing in enabling this collaboration.

Sherry: Mediant proposed the concept of a Digital Legal Proxy to the working group and it was accepted by the majority of members. We created an application program interface, or API, in partnership with other VSM platform providers. These APIs facilitate the Digital Legal Proxy by electronically conveying a beneficial holder’s status and voting authority as they request admittance to a meeting. They give an issuer and their VSM provider everything needed to process a shareholder as they would in a physical meeting.

Stacey: Compliance and the shareholder experience will improve as the industry harmonizes on APIs and proxy plumbing. That’s why the working group is pushing for common standards to be universally adopted. The APIs will be effective on or after March 1, 2021.

Q: Will the expansion in VSMs increase public access?

Sherry: The percentage of VSMs allowing guest attendance was at 90 percent prior to COVID-19. This remained consistent throughout the 2020 season so the expectation is that public access will increase in line with the trend towards virtual meetings. The adoption of common standards will extend the benefits of public access while protecting the participation and voting rights of shareholders.

Stacey: Greater public access is to be welcomed, but achieving this in live meetings requires a validation process to delineate those with shareholder or proxy rights from the general audience. Secure authentication is essential: “Who are you? How many shares do you have? Have you voted?” We’re building this security into our APIs to enable public access to be securely expanded.

For more information about VSMs or our Digital Shareholder Meeting platform, contact info@mediantonline.com.