By Nina Trentmann
Some of the companies that are once again hosting their annual
shareholder meetings virtually this year are hoping to improve the
experience for investors, many of whom felt muted last year after
the sudden shift to remote technology.
Warren Buffett's Berkshire Hathaway Inc., pharmaceutical giant
Pfizer Inc. and Dutch software and services company Wolters Kluwer
NV are among the companies working to increase interaction with
their shareholders, from allowing investors to pose live questions
and interact with management, allocating more time for questions to
incorporating new videoconferencing tools.
The bulk of annual investor meetings -- which take months of
preparation -- usually is held between mid-April and June. Last
spring, many businesses abruptly switched to remote events after
lockdown orders and restrictions were put in place to slow the
spread of the coronavirus pandemic. The last-minute changes to a
virtual format resulted in shorter meetings, fewer direct questions
and technical glitches that prevented some shareholders from
voting.
This year, 346 companies, or 86% of a total of 403 in the
S&P 500 that filed their proxy statement through April 22, said
they would hold their annual shareholder meeting remotely as large
physical gatherings remain restricted, according to data provider
MyLogIQ.
Many of these companies say they are better prepared for virtual
meetings. Their efforts also come as many investor-relations
departments look for new ways to connect with more shareholders to
address the recent surge in individual investing.
"Investors expect public companies to do a better job this year
of providing meaningful ways for their shareholders to participate
in virtual annual meetings," said Amy Borrus, executive director at
the Council of Institutional Investors, an investor group
representing pension funds and other big money managers. "Unlike
last proxy season, corporate executives have had a year to plan and
work out any kinks."
Berkshire Hathaway, which used to welcome tens of thousands of
investors a year to Omaha, Neb., for instance, will allocate 3 1/2
hours for Q&A during its annual event on May 1.
That amount of time is unusual, said Miriam Schwartz-Ziv, a
senior lecturer at the Hebrew University in Jerusalem who has
researched virtual shareholder meetings. Still, for Berkshire, the
2 1/2 hours of Q&A at last year's event was less than half the
time it allocated for previous in-person events, she said. The
company didn't immediately respond to a request for comment.
U.S. securities regulators also are watching closely, even
though annual shareholder meetings are largely governed by state
law. "We strongly encourage companies to look at virtual meetings
as an opportunity to enhance but not stifle shareholder
participation and voting," John Coates, acting director of the
corporate finance division at the Securities and Exchange
Commission, said at a conference last week.
New York-based Pfizer accepted both live questions and advance
submissions during its meeting on Thursday, an improvement from
last year, when questions had to be filed ahead using an online
platform. Pfizer also offered a video stream of the chairman's and
management team's speeches, as opposed to the audio-only platform
last year, according to a spokeswoman. "We have designed our
meeting to align with the in-person meeting as much as possible,"
she said.
Netherlands-based Wolters Kluwer last week allowed shareholders
to ask questions in real time. In 2020, people had to submit
questions in advance with a moderator reading all of them during
the meeting, Chief Financial Officer Kevin Entricken said.
The shift to a virtual format last year resulted in overall
shorter meetings with less time for questions from investors.
Shareholder meetings at a sample 125 companies in the S&P 500
in 2020 lasted about 32.7 minutes on average, 17% shorter than the
physical event the year before, according to a recent study by the
Hebrew University of Jerusalem.
The time allocated for questions and answers went down by 16%
and companies on average spent 2 minutes answering a question,
compared with 2.6 minutes during the prior year, the study found.
"The quality of the participation at online meetings is very
limited," said Ms. Schwartz-Ziv, the author of the study. "There is
no dialogue in an online meeting."
Companies that provide the technology used for the meetings
point to improvements, including better live video streams and the
ability to identify shareholders more easily. "A year later, we are
all experts in virtual meetings," said Sherry Moreland, chief
operating officer at Mediant Communications Inc., one of the
technology providers. "We now know how to use the technology."
Broadridge Financial Solutions Inc., a provider of investing,
governance and communications tools, recently overhauled its
platform to offer Zoom-like video functionality, better planning
instruments and more options for Q&A. Most of the company's
U.S. clients have been transferred to the new product, Broadridge
said.
Virtual shareholder meetings have several advantages for
companies. They cost less and don't take up as much time in
executive calendars as in-person events. Hosting the event remotely
also can make it easier for more investors to attend.
Some companies already are exploring new formats to communicate
with individual investors, including hosting events on Clubhouse,
the audio-discussion app. "We called it an 'ask me anything'
meeting," CarParts. Com Inc. CFO and COO David Meniane said. The
auto-parts retailer said about 2,100 investors and others attended
its 40-minute-long session.
Oral-care company SmileDirectClub Inc. plans to host an event
via Clubhouse around its next earnings release, CFO Kyle Wailes
said. "There are a variety of Q&A sessions that we have seen
work well for other companies," he said.
Many companies still haven't decided how their investor events
will look like once the pandemic has abated. Some of them plan to
return to an in-person meeting, while others are leaning toward
hosting a hybrid or an online-only event.
Toy maker Hasbro Inc. expects to go back to a physical event,
said CFO Deborah Thomas. "We think it's good practice," Ms. Thomas
said, referring to having an in-person shareholder meeting.
-- Mark Maurer contributed to this article.
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
April 26, 2021 08:14 ET (12:14 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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