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Amazon to Join Starbucks, Berkshire in Shareholder Distancing (1)

March 17, 2020, 12:02 PM; Updated: March 17, 2020, 2:53 PM

Coronavirus concerns are driving companies like Amazon.com Inc. to join Starbucks Corp. and Berkshire Hathaway Inc. in scrapping in-person gatherings with shareholders this year.

These shareholder meetings are among what could be hundreds in the U.S. held virtually as health officials recommend social distancing to stem the spread of Covid-19.

“We are hearing from a lot companies looking to understand their alternatives,” said Cathy Conlon from Broadridge Financial Solutions Inc., which provides a platform for holding investor meetings online or by phone.

About 300 shareholder meetings were held on this virtual platform in 2019. Broadridge expects that figure to more than double this year, with some companies going virtual in anticipation of a disruption to their in-person events. Others are making a remote meeting their backup plan, disclosures to investors show.

Investors that have pushed back on virtual meetings for limiting face time with corporate leaders are softening their stance in light of the pandemic.

Scott Stringer, who oversees New York City’s pension funds, has threatened to vote against board members at companies with online-only meetings. Stringer says votes are decided case-by-case, but the funds won’t act against companies that cite the virus and commit to in-person meetings in the future.

“Public health must of course be a top priority,” he said in a statement.

Switching Venues

Starbucks shareholders were set to meet at a Seattle theater March 18. The meeting is now online-only amid an ongoing outbreak in Washington, the state hardest hit by the virus.

Seattle-based Amazon is likewise asking its investors to participate virtually later this year, according to a company spokesperson. So is Berkshire Hathaway, whose annual meeting is known as Woodstock for Capitalists for the thousands of attendees it draws to Omaha, Neb.

The Securities and Exchange Commission is letting companies announce a change of meeting plans without sending out a full filing to investors. SEC guidance issued March 13 also urged companies to make virtual accommodations for investors who put their own proposals up for a vote.

Companies could still run into logistical issues, depending on where they’re based, since not all states allow online meetings. Broadridge’s Conlon said purely virtual is allowed in 30 states including Delaware, where most companies are incorporated. Another 13 states, including New York, allow investors to tune in remotely to a physical event.

“Many annual meetings don’t have that many shareholders show up,” said Mary Alcock, an attorney who advises companies on governance issues as counsel at Cleary Gottlieb Steen & Hamilton LLP. But company executives, directors, and auditors often attend the meeting.

“Given the emphasis on social distancing, the idea of asking any bunch of people to show up and be in the same room together seems counterintuitive,” Alcock said.

(Updates with additional information on state law)

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

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