Online Shareholder Meetings: The Good, the Bad, and the Hybrid

I read Dominic Jones' article More U.S. companies choosing virtual annual meetings for this week. The article goes on to discuss how some companies are moving to virtual or hybrid shareholder meetings. He talks mostly about how companies now have the ability to conduct their voting process online. Before this most companies that held online meetings had to have votes either mailed, phoned, or faxed in before the meeting started.

Now by allowing for shareholders to vote and pose questions online it makes to point that that the Notice & Access laws have some validity and if done the right way can be useful. Notice & Access allows for companies to send shareholders a slip of paper that has a URL address printed on it. The URL allows shareholders access to the company's shareholder materials rather than receiving a packet from the company. This saves the companies money and time in sending out their materials.

By having these online meetings it gives many shareholders the ability to attend and vote at these meetings without having to fly all over the country. This is particularly beneficial for shareholders who own shares of several companies. It saves everyone, the company and shareholder, time and money.

Jones also notes that "Most of the companies moving to [virtual meetings] are doing so because they don’t see value in having a shareowner meeting at all if only a few people show up." The hope is that more shareholders will attend the meetings if they are held online. However, for those who do disagree, companies like Intel are holding a hybrid meeting which means they will be holding both types of meetings. The hope is that this will allow for more shareholders to attend the meeting and vote, but it will also hold board members more accountable by forcing them to physically attend the meeting.

Personally, it seems as though the hybrid meeting seems to be the best move for all. It provides for the most people to attend while still upholding the integrity and accountability or the board and upper management. It won't allow anyone to hide behind a camera or the internet. It'll be interesting to see where companies take this in the upcoming years.

Please Don't Read Our Report

I read Dominic Jones’ piece on Moody’s Corporation today and it really struck a cord with me regarding my last piece. His piece Dear Moody’s Corp: Type this fast 3 times discusses how some companies send out annual shareholder materials.

The point Jones is trying to make is that the system is severely flawed. Jones paraphrases the SEC who notes that the “process for the delivery of annual meeting materials, companies can mail their shareholders a slip of paper containing a URL where recipients can access their proxy materials online.” The piece went on to explain that Moody’s Corporation was doing just that and sending their shareholders a piece of paper with an unnecessarily long and complicated URL and very bland instructions. Additionally, once a shareholder actually made it to the site, the document and site are set up very poorly and offer practically no navigation through the tedious 214 pages.

Jones also makes good points when he brings up that Moody’s should at the very least be shortening the URL and taking steps to ensure its shareholders reach the site. He also says that the SEC is not doing it’s job and is allowing theses “materials [to be] in half-baked, barely usable formats” and are “akin to a root canal.”

I think Jones brings up very good points and I agree with him completely. I just would take it a step further to imply some other things. By sending out your annual shareholder materials in the way that Moody’s has, they are basically telling shareholders, please don’t look at our report. We are going to make it as difficult as humanly possible to find, read, and understand the material. It almost makes one wonder if there is something in there they do not want shareholders to read or if they just simply do not want any shareholder input and this is their way of trying to keep some quiet.

Perhaps I am wrong and this is simply a case of ignorance and a company that does not fully understand the capability of the technology available today. This may be an actual possibility, especially after seeing how poorly laid out and navigable Moody’s website is.

The problem becomes a lack of transparency, which I feel is essential for all companies especially those that frequently deal with their investors. What Moody's has done is about as legally close to being opaque as a company can be.