By Jeff Tryka, CFA, Senior Director 

Our team recently had the opportunity to attend webcasts by two of the largest transfer agents in the United States on how to efficiently transition annual shareholder meetings from live, in-person events to virtual meetings online. Given the continued uncertainty surrounding the impact of COVID-19 quarantines and restrictions on travel and gatherings, an increasing number of issuers are contemplating a move to a virtual meeting format. On clients’ behalf, we gathered a multitude of facts from these webcasts, including the streamlined nature of the process due to the work of the transfer agents as well as recent regulatory flexibility implemented by the SEC with the timing of the pandemic so close to proxy season.

The overall functionality of both transfer agents’ interfaces was robust and intuitive, providing flexibility for presenters in multiple locations, different privileges for shareholders and guests, and background controls to screen question submissions for presenters to answer. Voting seemed to be reasonably clear cut, though the transfer agent can help determine if a legal proxy is needed for beneficial owners to vote at the meeting. The only other caveat that both firms highlighted was potential capacity constraints. Although both confirmed they had adequate capacity to handle a surge in virtual meetings, they also cautioned that certain days and times may represent peak demand. As a result, we counsel flexibility on the potential need to adjust the time of your meeting to provide for better attendance and overall results. Finally, there is the impact from state law, as most states allow for virtual meetings, but some do not.We suggest consulting with your SEC counsel to determine the key legal aspects of pursuing this strategy.

As we continue to think about this significant transition in annual meetings, we recognize the enormous potential for beneficial opportunities that exist. On a long-term basis, many boards and management teams may decide that the expense of renting ballrooms in major city hotels and the cost of management time to travel to these meetings may be alleviated by the adoption of virtual meetings on a permanent basis. In this scenario, we view an opportunity to evolve the annual meeting into much more than a rote shareholder ritual filled with legal disclaimers and procedural items. We envision future annual meetings to instead transform into a virtual showcase of your business, not unlike what Warren Buffet has done with his Berkshire Hathaway annual meetings.

As an example, many clients operate in locations across the globe. We are encouraging them to consider opportunities to host the virtual meeting at a different location each year, perhaps including a video tour of facilities or something similar. If a company has a production process that is not well understood by investors, we suggest considering the production of a video of the process and hosting the meeting from that operation. If a company is consumer-focused, we might suggest highlighting products during the annual meeting to show off unique and differentiating features for the benefit of shareholders and customers alike. As an added bonus to these considerations, most virtual shareholder meetings can be recorded and archived on the company website until the next annual meeting, allowing future investors to learn more about the company as a whole.

Certainly, this transformation of the annual meeting might require some investment in professional video production, but alternatively, we instead consider it as a re-investment of the savings from the room rental and travel that the company would have spent on a traditional annual meeting format. This is a great opportunity to heighten creativity and completely turn the annual shareholder meeting inside out. Although it might not get the attention that the Oracle of Omaha engenders, we see it as an opportunity to dramatically improve the value of these efforts for shareholders.

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