Around here, corporate shareholder meetings range from bare bones, just-the-facts recitations of board-member election results and auditor selections to highly produced, operatic company hagiographies.
But one feature at many is the opportunity for ordinary stockholders – be they happy customers, activists with a proposal to elevate or low-level employees speaking truth to the top — to ask a question, live and in person, of company management, some of whom happen to be among the world’s wealthiest and most powerful people.
For that reason they also mark one of the few days on the corporate calendar when things can go off script. There’s often a frisson of anticipation in the room as the microphone is handed over to someone in the audience, stepping up to ask a pointed, or sometimes meandering, question of the likes of Jeff Bezos or Bill Gates.
Microsoft, which for several years has enabled shareholders to attend its annual meetings virtually, recently said it will do away with the in-person option this year, joining a trend that’s been gaining momentum across corporate America. Shareholder advocates say something vital is being lost.
“It is of paramount importance for management and the board to be willing, at least once a year, to physically look shareholders in the eye, to account for their actions, and to hear kudos or complaints regarding the impact of their operations and decision-making,” said Bruce Herbert, CEO of Seattle-based investment firm Newground Social Investment, in an email lamenting the change at the Redmond tech giant.
Microsoft executives said in announcing the move that the virtual-only format “will offer the same opportunities to participate as provided at the in-person portion of our past meetings,” including a 30-minute question and answer session with shareholders. A company spokesman did not directly address a question about whether shareholder questions submitted to the virtual shareholder meeting would be pre-screened before being aired, noting that rules of conduct, including details of how questions will be taken, will be posted in advance of the Dec. 4 meeting.
The virtual meeting format has significant upsides, particularly for shareholders who live far from a company’s headquarters, or can’t take time off to attend the business-hours events. Attendance at the Microsoft annual meeting, typically held at Bellevue’s Meydenbauer Center, has been on the wane, down about 50% in the last five years, a spokesman said.
Also, Microsoft will provide real-time translation of the shareholder meeting in several languages. And the company posts video interviews with board members as part of its “ongoing shareholder engagement that occurs not just through our annual shareholders meeting but throughout the year ahead.”
Herbert said he thinks Microsoft is likely to run a virtual-only shareholder meeting as well as it can be run. But he said the company’s move “sets a terrible precedent and provides cover for other companies” that have excluded voices and avoided questions through the format.
Moreover, he said, virtual-only meetings deny shareholders the opportunity to “know who’s asking what, what the sentiment of the room is, or to gauge management’s preparedness or awkwardness in response to questions.” Doing away with in-person meetings also limits the opportunity they provide for shareholders to interact with each other, management and the press.
That may be part of the motivation. Activists have turned some major company annual meetings into an airing of grievances on a host of environmental, social and governance issues, with protestors greeting shareholders as they make their way in.
The hybrid approach – offering in-person and virtual access to the meeting – is the “gold standard,” Herbert said, and the way virtual meetings are conducted matters.
Virtual shareholder meetings began about a decade ago, but have become more popular with corporations and are now allowed in more than 30 states, including Washington, which recently changed its laws. The Microsoft spokesman declined to comment on whether the company lobbied for the change. Another dozen states require an in-person meeting along with a virtual one.
Last year, some 285 companies hosted virtual meetings using software from Broadridge Financial Solutions, which counts Microsoft among its customers. Of those, 90% were virtual-only and the vast majority provided only live audio of the meeting. About 3% of the meetings allowed live questions to be asked over the phone, according to Broadridge.