Corporate Secretary recently held a virtual event on “Governance During COVID-19 and Where it Goes Next.” Our President and Chief Operating Officer Sherry Moreland participated on the panel, “Virtual AGMs: Getting it Right the First Time, and What it Means for the 2021 Proxy season.” Discussions during the session included how COVID-19 changed the 2020 annual shareholder meeting landscape and what the new normal might look like for future annual meetings. We wanted to delve further into this topic.
As we’ve talked about in an earlier post, the annual meeting is an important opportunity for an issuer’s management team to update shareholders on company developments, answer their questions and vote on proposals. In-person meetings have been plagued by low shareholder participation and engagement and virtual shareholder meetings have only started to gain momentum in recent years. Yet, physical meetings have remained the preference. According to a recent report from Intelligize, a LexisNexis company, 70 percent of annual shareholder meetings on or before March 31, 2020 were in person.
Cue the COVID-19 pandemic.
The pandemic forced a change in the annual shareholder meeting format for corporate issuers. After social distancing and other guidelines to protect the population’s health were put in place in late March, in-person meetings were no longer a viable option for the foreseeable future. The Intelligize report cites that as of April 1, 2020, 77 percent of annual shareholder meetings were virtual.
In essence, the pandemic made annual meetings more accessible to shareholders who no longer had to travel to a physical location to participate in creating overall visions for the future of the company.
And it has accelerated the adoption of this new technology. Companies that had previously resisted embracing the digital era are now accepting that this could be another way to engage with investors and facilitate their participation in the annual meeting. Many issuers are already using online proxy voting and other electronic communications to connect with their shareholders. Virtual annual meetings are a clear next step in the deployment of technology for shareholders, addressing accessibility and engagement.
The New Annual Shareholder Meeting Landscape
Any company that successfully holds a virtual meeting this year for the first time will have to overcome the most powerful argument against it: the fear of the unknown. Companies that went virtual this year now have experience and the data—on shareholder attendance, cost savings, and more—that can be used for making a switch to a virtual meeting in the future.
For additional information and tips on holding virtual annual meetings, download our free Best Practices Checklist for Virtual Annual Meetings.