Most 2020 annual general meetings will be conducted virtually, possibly sparking a permanent change in shareholder participation.
With social distancing necessitated by the Covid-19 pandemic, most 2020 annual general meetings (AGMs) will be conducted virtually—possibly sparking a permanent change in shareholder participation. While some might miss the free lunches and fancy notepads, virtual meetings will enable a larger audience to participate in this important corporate ritual.
The question is whether this will affect the future of governance. “Will companies that have made the shift to a virtual meeting format out of necessity continue to do so in future years out of convenience?” asks Mark Brockway, head of ISS Corporate Solutions. ISS surveys show that before the 2020 proxy season, virtual meetings were rare; but as of March, one in three US companies planned to move their annual meetings online. Only 5% of the 230 respondents said that their AGMs would still be in-person. Many large companies outside the US also decided to go online.
Of course, better technology helps make this revolution in possible, with Lumi Global and Broadridge Financial Solutions being two of the more established providers. Broadridge hosted an AGM with a virtual-attendance option for Intel in 2009, and has seen that business grow ever since.
A virtual shareholder meeting means that distance and travel costs are no longer barriers to participation. Still, critics note that shareholders might not have the same power to question management in a virtual setting. Climate activists and other protesters cannot stage physical protests in online meetings, which could affect the strategy of those pushing for environmental, social and governance (ESG) changes.
One of the first companies to experiment with virtual shareholders’ meetings—well before the global pandemic—was luxury shoemaker Jimmy Choo, which wanted shareholders to participate in company governance regardless of physical location. “We are very pleased with the outcome,” said Chairman Peter Harf after the 2016 annual meeting, noting that it had succeeded in expanding access for shareholders.