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Both Valuable and Troubling: Virtual Annual Shareholder Meetings

When thinking of annual shareholder meetings, one may be tempted to think of lavish, fun-filled annual get-togethers like the type Berkshire Hathaway puts together.1 But in reality, most annual meetings are not nearly as exciting or glamorous.2 That is not to say, though, that they are not important. Annual shareholder meetings are valuable for a number of reasons.3 One pertinent reason is that shareholders get an opportunity to publicly ask management and directors questions about the company.4 An investor can also ask questions one-on-one, thereby potentially receiving a more candid answer.5 Perhaps the most vital rationale for shareholder meetings is the opportunity to read the body language of higher level members to gauge truthfulness and alignment with shareholder interests.6 As one successful investor notes, “Face-to-face meetings separate the bluffers from the doers.”7 And as vital as such in-person annual meetings are, recently there has been a move away from this model to virtual shareholder meetings.

In a world that is fast-paced and technological, streamlining is often seen as ideal.8 To streamline the annual shareholder meeting process, companies have begun livestreaming meetings, offering investors a chance to participate remotely.9 This change in meeting method is either laudable or troubling, depending on shareholder options. The more laudable avenue is offering hybrid meetings. Those who favor in-person meetings remain unimpeded, while those who cannot travel are given an option to attend virtually.10 The shift from laudable to troubling occurs when in-person meetings are cut entirely, when an investor’s only option is to “attend” remotely.

When a company only offers investors a virtual shareholder meeting, only upper-level members tend to benefit. Virtual meetings give “the company more control over the proceedings, potentially reducing the chances that the board or management will be embarrassed by a tough shareholder query.”11 While no decent person would advocate for embarrassment, the point of these meetings is providing an opportunity for investors to ask tough queries. One notable trend in virtual-only meetings is requiring shareholders to submit their questions in advance of the meeting.12 It is feared that tough questions get pushed down the list to the point of “non-existence” or worse, that undesirable questions will go unanswered entirely.13 At the very least, submitting questions in advance allows the speaker to carefully and deliberately craft an answer that sidesteps landmines presented by the question. Moreover, shareholders are denied the opportunity to gauge a speaker’s candor. The Securities and Exchange Commission has noted that companies have a right to govern the format of annual shareholder meetings.14 In other words, a remedy lies in the populace not the law.

Investors have recently fought back and changed the online-only status quo at major companies. Union Pacific and ConocoPhillips have backpedaled their virtual-only shareholder meeting decisions after investor backlash.15 Due to negative reaction by shareholders, Union Pacific plans to revert to an in-person meeting and ConocoPhillips plans to offer hybrid meetings.16 Given the aforementioned concerns of virtual-only meetings, this author hopes that more investors push their companies away from virtual-only annual meetings. The ideal would be hybrid meetings which provide the best of both worlds. Annual meetings should be like town halls: there is an opportunity to ask questions, shake hands, and both parties come away feeling like they had a good experience.17

  1. Lisa Smith, A Peek Into Shareholder Meetings, Investopedia, (last visited Feb. 16, 2018). 

  2. Id. 

  3. Rusmin Ang, 5 Reasons Why You Should Attend Annual General Meetings if You’re an Investor, Fifth Person (Apr. 3, 2017),

  4. Id. 

  5. Id. 

  6. Id. 

  7. Id. 

  8. See Robert Richardson, Virtual-Only Shareholder Meetings: Streamlining Costs or Cutting Shareholders Out?, Harv. L. Sch. Forum on Corp. Governance Fin. Reg.,

  9. Id. 

  10. Id. 

  11. Id. 

  12. Id. 

  13. Id. 

  14. Id. 

  15. Emily Chasan, Investors Opposing Virtual Shareholder Meetings Notch Wins, Bloomberg (Jan. 9, 2018),

  16. Id. 

  17. Id.