Shareholder Meetings: How-To and How-Not-To

The annual shareholder meeting of a large Canadian or U.S. public company is an opportunity for directors and executives to showcase their individual and collective accomplishments. In most cases, corporate presentations are met with polite applause from the assembled employees, shareholders and other interested parties. For companies whose operations spark controversy, however, such meetings are not always agreeable affairs.

Oil giant Chevron Corporation (Chevron) held its 2010 shareholder meeting on May 25 in Houston, Texas. According to a Houston Press blog post on the following day, some would-be attendees who had the documentation needed to gain admission to the meeting as well as concerns about the impacts of Chevron’s activities around the world were refused entry. Shelley Alpern, Vice-President at Trillium Asset Management Corporation, attended the Chevron meeting. Ms Alpern noted that several of the people turned away by company security were carrying valid proxies and should have been admitted.

Lydia Beebe is the General Counsel of Chevron Corporation (Chevron). She is also co-Chair of the U.S.-basedCouncil of Institutional Investors (CII) a nonprofit association of public, union and corporate pension funds with a focus on corporate governance.

Ms Beebe’s two roles must sit awkwardly together these days because CII advises companies to conduct shareholder meetings according to standards that Chevron definitely failed to meet in May.

On October 1, 2010, CII released Seven Smart Practices for Shareowner Meetings, a document that encourages public companies to “set fair policies for admission” to meetings and to “disclose them clearly and enforce them consistently”. Denying admission to legal proxyholders who have a bone to pick with the company is clearly contrary to this CII “Smart Practice”.

Another CII recommendation is that companies “avoid” holding “virtual-only” shareholder meetings. A virtual-only meeting is one that takes place only online. There is no physical meeting place and therefore shareholders may not attend in person. According to CII: “The opportunity for face-to-face interaction between shareowners and the company’s leadership is rare and should be preserved.”

The virtual only meeting is also rare. We are not aware of any Canadian examples. In the U.S., Symantec Corporation announced that its September 20 2010 meeting would take place only in cyberspace. Shareholder objections to Symantec’s virtual-only decision do not appear to have been in vain, however, as the company announced that it would provide a physical venue in addition to an online option for its shareholders meeting in 2011.

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