On the web, annual meetings matter

By Dominic Jones

THIS is a good year to put more effort into how your company handles its annual shareholder meeting on the Web. Think of it as a dry run for future years when annual reporting to shareholders will mostly be handled online.

Most companies currently do an appalling job with their annual meetings on their websites. It wasn’t always like this.

In the early days of investor relations websites — back in the mid- to late-90s — companies experimented and did some innovative things.

Then during the Dotcom Boom companies stopped bothering because their shareholders, giddy at the returns they were making in the market, didn’t seem interested.

I remember one senior IRO, who was then considered a pioneer of IR websites, declaring before his peers in mid-2001 that shareholders didn’t care about annual meetings.

His company, which had close to one million shareholders, had stopped webcasting its annual meeting “and no one noticed.”

70% ignore annual meetings on their websites

That was six years ago. His thinking is even more wrong today.

Companies cannot still act like they did before Enron, SOX and the growing institutional activism that is shaking up boardrooms. But that’s exactly what most are doing.

Just under 70% of the 525 companies whose sites we’ve reviewed in the past six months do not webcast their annual meetings and archive the event. The survey includes North American, European, Asian and emerging market large-caps. On a regional basis, U.S. and Canadian companies are less likely to webcast their annual meetings than companies in other regions.

There are many other things companies don’t do around their online annual meetings, but webcasting the meeting is the most basic practice. The shortage of companies webcasting their meetings is highly illustrative of the broad lack of commitment companies demonstrate to engaging their shareholders.

The vast majority of companies simply ignore their shareholders and other stakeholders. There’s no attempt to engage them in the process or communicate in simple, clear and effective ways through well-designed online annual reports and proxy statements.

Annual meetings perceptively important

There’s a lot that companies could do ($ members) this proxy season to communicate with their shareholders via the Web. It’s not expensive to do and there are few, if any, downsides.

But it takes effort. Just a little effort can go a long way to demonstrating that your company takes the role of shareholders and other stakeholders seriously, especially compared to the vast majority of companies that couldn’t be bothered.

While they are symbolically important, annual meeting proceedings also can give prospective investors insight into a company’s relationship with its shareholders and help them identify issues of concern to other investors.

How investors perceive a company’s responsiveness to shareholder interests is a key factor in their decision to invest. If your company’s board and management are accessible and responsive — or just show a willingness to listen — then investors are likely to be more confident entrusting their money to its stock, all other things being equal.

It is an investor relations issue

I can hear some of you saying that this really isn’t your problem, or that you don’t hear investors complaining.

If your annual meeting is handled by another department, send this article to them. But let’s not forget that communicating with investors is an IR function. If another department is doing the communicating, it is most definitely something IR should be involved in.

As for not hearing complaints, a big reason is that there’s no incentive and little opportunity for people to do so. Most IR departments spend most of their time interacting with sell-side and buy-side analysts who typically are not interested in the annual meeting.

Furthermore, it’s unlikely that people are going to complain about a lack of annual meeting information. What’s the incentive for shareholders to engage a company when it’s obvious to them that the company is not interested?

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