Berkshire Hathaway is famous for its annual shareholders’ meeting, which draws 30,000 or so to Omaha, Nebraska, for a long weekend in May that, in addition to company business and a question-and-answer session with celebrity chairman Warren Buffett, typically includes a 5K run, a picnic, and special shopping hours and discounts at well-known local retailers.
Other companies also have made their annual meetings into star-studded extravaganzas — Starbucks comes to mind — but the coronavirus pandemic dampened enthusiasm for such mass gatherings beginning in 2020.
Since then, some publicly traded companies, like Berkshire Hathaway, have brought the events back. Others, like Starbucks, have not, continuing to hold annual meetings online rather than in-person.
And that has sparked debate in corporate circles.
The major stock exchanges require that their listed companies hold annual meetings. “Virtual” ones on the web predated the pandemic, but were few in number; as COVID-19 took hold — just as the April-to-June annual meeting season kicked off in 2020 — they soared.
Glass Lewis, an adviser to investment managers on corporate governance issues, in an update to its guidelines for evaluating shareholder proposals for the 2024 meeting season, took note of the trend toward virtual annual meetings and the criticism that they could reduce board accountability to shareholders.
Instead of virtual-only meetings, though, Glass Lewis suggested a hybrid merited attention: complementing the traditional in-person meeting with an online option for shareholders who can’t attend.
The Glass Lewis guidelines recommended voting against company directors sitting on a board’s governance committee if virtual-only meetings were planned without “robust disclosure” that assured shareholders they’d have the same opportunities to participate as they would at an in-person meeting.
That hybrid possibility also was mentioned in a paper published in the Boston College Law Review in 2022 that tackled the bigger question of why annual meetings, once “a vibrant forum for shareholder democracy,” had become tired and staid.
The paper, written by law school professors Yaron Nili (University of Wisconsin) and Megan Wischmeier Shaner (University of Oklahoma), says changes in shareholder demographics are partly to blame, with institutional investors (state pension funds, for instance) carrying more sway than mom- and-pop investors or even company employees with stock.
Big shareholders can have management’s ear at any time; the small fries might have looked forward to interacting with executives at the annual meeting, but as the sessions became more “perfunctory rather than substantive,” their interest waned as did meeting attendance.
“[T]he pandemic-driven transition to virtual meetings is an opportunity to re-examine the lost role and function of the annual meeting as a key pillar of shareholder democracy,” the professors write, “and address how the annual meeting can serve as a platform to advance corporate social responsibility and [governance] issues.”
