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Revisiting the Question of Virtual Shareholder Meetings in Proxy Season 2020

In recent years, virtual shareholder meetings have faced opposition from governance advocates who fear they may prevent investors from effectively engaging on environmental, social, and governance (ESG) issues. However, with the COVID-19 pandemic limiting travel and public gatherings, more companies are turning to remote meeting technologies this proxy season.

Turning to Virtual Shareholder Meetings

Even before the peak of the COVID-19 crisis in Europe, a March survey found that over three-quarters of European investors had already stopped attending investment conferences. Meanwhile, the US Centers for Disease Control and Prevention announced on March 15 that all gatherings of more than 50 people were suspended for at least two months.

Among the available solutions is Broadridge’s established offering, a product specifically designed to enable firms to conduct their annual general meetings (AGMs) online via streaming audio or video. It can also authenticate attendees and facilitate validated shareholders to submit questions and vote online.

Health insurer Cigna is one firm that has turned to virtual technology for its 2020 AGM, citing COVID-19. Cigna said that investors attending the virtual shareholder meeting on April 22 will be able to vote by following instructions on the meeting website. It also encouraged shareholders to vote and submit their proxies in advance, either by internet or telephone.

Virtual shareholder meetings have faced opposition from governance advocates who fear they may prevent investors from effectively engaging on ESG issues.

Ongoing Debate

Broadridge and other proponents of the overarching trend argue that remote meeting technology can simplify AGMs by removing the need for travel and eliminating the high cost associated with holding physical gatherings.

Meanwhile, governance advocates like the Council of Institutional Investors have resisted virtual AGMs on the grounds that they undermine shareholders’ ability to engage meaningfully and directly with board members. Critics like New York City comptroller Scott Stringer fear that not holding AGMs in person means that management might be less scrutinized or go unchallenged on key issues, even suggesting that some companies “are likely using online-only meetings to insulate themselves from uncomfortable interactions with concerned shareowners.”

Regardless of the arguments for or against virtual meetings, in the 2020 proxy season shareholders do not have alternatives given the quarantine measures in place.

In March, proxy advisory firm Glass Lewis published an update regarding companies opting to hold virtual-only shareholder meetings between March 1 and June 30 due to COVID-19. The firm will not recommend voting against members of these governance committees on this basis, but it expects them to disclose their rationale for taking this route, including a citation of the COVID-19 crisis.

Still, with the use of virtual technology for AGMs growing over the past decade, it is conceivable that some companies trying the technology for the first time will continue holding virtual meetings even after the COVID-19 crisis has passed.

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