The coronavirus has forced many public companies to go virtual. And, no, we aren’t talking about the switch to remote work. We’re talking about the transition to virtual annual shareholder meetings, which, while prompted by the pandemic, could stay in effect even after the virus is gone.
The global health crisis has forced an unprecedented number of public companies to adopt a virtual format for their annual shareholder meetings in 2020, according to a new report released today by Intelligize. The report, Proof of concept: an Intelligize report on virtual annual shareholder meetings, suggests that this year’s trend could pave the way for a permanent switch.
The arguments for and against virtual meetings are well known. Advocates tout cost savings, reduced environmental impact, shareholder convenience, broader attendance, and greater shareholder participation in the voting process. (And they had some limited success.) Meanwhile, opponents lament that virtual meetings rob investors of the opportunity to confront management face-to-face, and fear that companies will cherry-pick questions in the Q&A. With virtual meetings, activists also lose out on a high-profile setting to criticize corporate behavior.
Then the pandemic came, tossed the familiar arguments out the window, and forced companies to change. Our report addresses three major questions about annual shareholder meeting format choices in 2020 and beyond:
- How did COVID-19 change the meeting format choice for S&P 500 companies?
- How did state laws and locations of headquarters impact annual meetings in the 2020 proxy season?
- Is your industry ready for virtual annual meetings?
On the first, our report indicates that as of May 1, 2020, 65% of S&P 500 companies had either held or announced plans to hold virtual annual shareholder meetings this year. That may remove the biggest obstacle of all to virtual meetings—the fear of the unknown. Now that many companies have been forced to hold virtual meetings, they may never fear that choice in the same way again. Also, they now have the data—on shareholder attendance, cost savings, and more—that can be used in responding to future criticisms.
On the second question, our report offers a state-by-state breakdown on the number and percentage of firms that chose a virtual meeting format (by state of incorporation as well as by headquarters location).
On the third, we reviewed the top ten industries represented in the S&P 500 (using standard industrial classification code) and tallied up the number and percent of companies in each industry that adopted virtual meetings this year. The results were surprising for which industries climbed to the top—including, for instance, commercial banking.
The shift to virtual meetings may have been a leap of faith for issuers in 2020, but it wasn’t a blind one. And as our report suggests, by the time 2021 comes around, it may not feel like much of a leap at all.