Amid decisions to cancel or postpone large gatherings and events, many corporations – including Starbucks and Qualcomm -- are choosing to move their annual shareholder meetings online. Public interest advocates fear that this trend could become permanent at companies hoping to avoid scrutiny.
Matthew Josefy, an assistant professor of strategic management and entrepreneurship who has studied the issue, said it’s unclear whether virtual meetings should be classified as an emerging habit of well-governed or poorly governed firms.
“On the one hand, moving meetings online technically reduces the cost for investors to monitor the company, as they no longer need to travel to attend. Thus, we are investigating whether the presence of far-flung investors is a contributing factor to firms moving online. Further, it is unclear whether meetings even have the same cache as before, given the regular release of information and issuance of management guidance,” he said.
“On the other hand, going online severely limits the opportunity for shareholders’ to gain unfiltered access to management. Many have noted that the upcoming democratic debate will be very different without a live audience due to concerns regarding COVID-19,” Josefy said.
“Similarly, a shareholder meeting conducted without any live reactions in the meeting room also results in a different ‘feel.’ Accordingly, firms who are subject to greater pressure by activists may also have a greater propensity to move online as they may be able to reduce the likelihood of ‘unscripted’ moment. When there is not a physical location, it may be harder for protesters to find a way to attract the attention of either investors or management, and in turn more difficult to obtain media coverage highlighting their efforts and concerns.
“While many retail investors pay little attention to directing their proxy votes on such issues, one could argue that this is an important element of democracy moving forward. As firms have become more engaged on socio-political issues, shareholders can potentially influence the positioning of their firms.”