The impact of COVID-19 on corporate governance, and shareholder meetings, in particular, has been profound. According to data discussed at last week’s annual conference of The Society of Corporate Governance, over 2000 Issuers held a virtual shareholder meeting (VSM) this season – an increase of over 500%.
To a greater or lesser extent, the majority of markets around the world moved swiftly to make a provision for listed organizations to still fulfil their obligations, and hold an annual meeting – with a few notable exceptions. And in the US, of course, many states have a provision in state law that allows for virtual shareholder attendance, which has made the adoption of virtual technology this season a lot easier.
But what has been impressive to observe is the positive response from Issuers in adopting virtual meeting technology to maintain good corporate governance. However, although VSMs may be a necessity in 2020, will they still be as prevalent after the pandemic has passed?
Having run over 1200 virtual shareholder meetings in over 28 countries so far this season, our view is very much that virtual – or virtual combined with a much smaller in-room meeting, is here to stay. We have seen record numbers of shareholders attending virtual meetings – with AT&T and M&T Bank being just two examples of meetings with thousands of attendees. Engagement and participation have been similarly high.
Over the last few years, some investor groups and proxy advisors have made arguments criticizing the virtual meeting format. No one, however, really made the point that physical-only meetings are also very restrictive – the messaging should have been pro hybrid rather than anti virtual, and some markets, in Europe in particular, have paid the price for that this season. If only from a business continuity perspective, not being virtual or hybrid-ready led to the ‘behind closed doors’ format being widely used.
It is clear. With all the experience we now have, that as more organizations, and the shareholders that own them, become comfortable with the technology and the meeting experience, the number of hybrid meetings will continue to rise – coupling a virtual meeting alongside a smaller, in-room experience.
A revolution in the Shareholder meeting space has been long overdue. It’s a shame it took a global pandemic to force through change, but that change has happened. The technology is here, and it is proven and flexible – technology is not the issue. It is now all of our responsibility to define best practice (and the technology will accommodate that), and to ensure that the legal and regulatory frameworks are robust and clear.
Whether hybrid or virtual becomes the preferred option for organizations remains to be seen. What is clear is that the era of large, in-room shareholder meetings is over.