Let’s Go Virtual With Shareholder Meetings

top view photo of people having a meeting

Photo by fauxels on Pexels.com

By: Samantha Pelto

Virtual shareholder meetings have not yet become the standard in the United States, but they should be. Virtual shareholder meetings are held online with shareholders attending remotely, and a growing number of companies are holding their annual meetings in this format. In 2009, only four companies held virtual shareholder meetings, but that number increased to 285 by 2018.

State laws require companies to hold annual shareholder meetings to vote for directors or on other matters requiring shareholder approval. The annual meetings are an opportunity for shareholders to raise questions and concerns with the company’s directors and management. Thirty states, including Washington, now permit virtual-only shareholder meetings. Virtual-only meetings are meetings held exclusively online with no physical location.

Benefits of Virtual Shareholder Meetings

Virtual shareholder meetings have many benefits. Shareholder attendance at in-person meetings is often quite low, but virtual meetings eliminate the need for travel thereby increasing participation and making the meeting more accessible to shareholders. Virtual meetings can be easier to coordinate, and companies may realize significant cost savings by eliminating the need to hold the annual meeting at a physical location, including costs associated with conference rooms and catering. The virtual format also adds flexibility for directors and management to participate from any location.

Potential Drawbacks

Despite the benefits of virtual shareholder meetings, there has been some debate on the matter. Opponents of virtual shareholder meetings argue virtual meetings limit the full participation of shareholders and allow companies to pick and choose which shareholder questions they want to answer, avoiding the more difficult or uncomfortable questions. Virtual meetings also eliminate the face-to-face aspect of the shareholder meeting which may lead to a decreased sense of company accountability. Additionally, a company considering virtual meetings may experience pushback from its shareholders.

Hybrid Annual Shareholder Meetings

An alternative to in-person and virtual-only annual meetings is the hybrid meeting format. Hybrid shareholder meetings allow the participation of shareholders both in-person and virtually.  Hybrid shareholder meetings are permitted in forty-two states. Although this option does not necessarily reduce a company’s costs, it allows increased participation of shareholders because attendees not able to travel are still able to participate virtually.

Virtual Participation as a Requirement, Not an Option

Though companies are able to determine whether a virtual-only or a hybrid meeting would best suit their shareholder needs, more companies should opt out of utilizing exclusively in-person shareholder meetings. As technology continues to advance, the law should require, rather than permit, companies to allow remote participation of shareholders in annual meetings.

Virtual-only meetings are an especially great idea for non-contentious, routine meetings that would generally garner limited in-person attendance. Hybrid meetings could be a better option for all other meetings, so long as virtual attendees are given equal opportunity to participate as in-person attendees. There is no longer any reason to require interested shareholders to travel long distances to attend in-person annual meetings when the technology exists to support hybrid or virtual-only shareholder meetings.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s