Virtual meetings have different formats, the questions are asked in advance, and the content is different, too: ‘Talking about last year felt irrelevant’

Stay-at-home rules to stop the march of the novel coronavirus are forcing companies to either postpone their annual general meetings or turn them into virtual events—a first for many executives at a time of heightened concern over the resilience of corporate America.

“Every board is currently discussing, shall we postpone it or shall we hold it virtually?” said Betsy Atkins, a director on several boards, including Wynn Resorts Ltd. and Volvo Car AB.

Companies have long provided dial-ins for earnings calls and management presentations, and they have broadcast annual meetings for an online audience before. But before the coronavirus pandemic, these were largely seen as extras.

Now, with much of the world in lockdown, they have become necessities, often the only way companies can communicate with the financial community. Postponing annual meetings, after all, would deprive shareholders of the ability to ask management questions and cast votes.

Listed U.S. businesses usually hold more than 4,500 shareholder meetings between April 1 and June 30, according to Mediant Communications Inc., an investor communications company. So far this year, at least 920 U.S. companies had announced virtual meetings, up from 283 in 2019, according to ISS Corporate Solutions, a Rockville, Md.-based consulting firm and unit of Institutional Shareholder Services. About 70 companies have delayed their annual meetings.

Levi Strauss & Co. held its first virtual shareholder meeting on Wednesday. The San Francisco-based jeans maker, which usually uses the annual meeting to recap the past year, had to tear up the script.

“Talking about last year felt irrelevant to some degree,” a Levi’s spokeswoman said. Instead, executives focused on the company’s response to the crisis, as stores in the Americas, most of Europe and some Asian countries remain closed.

Turning a shareholder meeting into a virtual event also requires changes to the format, often resulting in more concise meetings.

“You cannot have a videoconference for a whole day,” said Brian Stafford, chief executive of Diligent Corp., which offers tools for remote board and executive meetings.

New formats, which are significantly less expensive than in-person meetings, also help executives prepare responses to shareholder questions. Some companies are asking investors to send queries prior to the virtual meetings instead of allowing spontaneous queries on the day.

Howard Hughes Corp., for instance, uses a tool that allows shareholders and analysts to upvote questions submitted by others, prioritizing the most popular questions. “From a planning perspective, it really helps,” said David O’Reilly, chief financial officer of the Dallas-based real-estate firm.

Shareholder representatives and proxy advisory firms have had reservations about virtual meetings in the past. But given the circumstances, shareholder associations such as the Council of Institutional Investors are now embracing them.

“The common complaint is that when you are moving a meeting to virtual, the voice of the shareholder can be more muted,” said Laurent Paulhac, chief executive of technology platform A Say Inc.

Companies that intend to make changes to their AGM have to inform shareholders in advance, and can do so through a filing with the Securities and Exchange Commission to avoid sending out additional physical proxy materials, according to a March 13 release by the agency.

The coming months could determine whether virtual meetings remain a viable option for companies once the pandemic ends.

“One wonders whether shareholder meetings in person have to happen, except if you are Berkshire Hathaway, ” said Mr. Stafford of Diligent, referring to the famous yearly gathering of stockholders that has become known as “Woodstock for Capitalists.” This year, it would have included a 5K run and a picnic.

But on March 13, Berkshire said it would ban shareholders from attending the meeting and instead provide a videostream.

“We will see many thousands of you next year,” Chairman Warren Buffett said in a statement. “Thanks for your understanding.”

By: Nina Trentmann

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