The Dull World of Shareholder Meetings Has a Virtual Future (1)

The age of the virtual AGM is upon us.

Amid lockdowns, travel bans and restrictions on indoor gatherings to curb the spread of the coronavirus, companies are shifting their annual general meetings online.

Starbucks Corp. last week converted its annual gathering into a virtual meeting, and Warren Buffett has told shareholders they won’t be able to physically attend Berkshire Hathaway Inc.’s event in May, with proceedings to be live-streamed. Regulators in the U.S. and Australia have both signaled support for virtual AGMs amid the widening virus curbs.

The move is opening up the annual events, which are often poorly attended and over-represented by retirees, to a wider pool of investors. And it’s accelerating the adoption of new technology as even companies that resisted embracing the digital era now have no choice.

Offering access “to people near and wide, whether they’re watching it from work or in a different country, automatically gives you a much broader representation of your shareholders,” said Susan Massasso, chief growth and brand officer at A2 Milk Co., an infant formula producer which has held four annual meetings with online access. “As a consequence there’s a much more broad and diverse range of questions and comments.”

Attendance at A2 Milk’s 2019 event jumped to 708 people from 444 a year earlier, and included 528 online participants, according to Link Administration Holdings Ltd., which offers services including facilitating annual meetings.

“Our attendance, including in-person and virtual, has been increasing over those years, so it’s clearly working,” Massasso said.

Rio Tinto Group, the world’s second-largest miner, on Wednesday advised investors not to attend a scheduled May meeting in Brisbane in person and said it was investigating the prospect of offering remote access.

Link’s analysis of more than 1,800 meetings held in Australia last year shows how few people typically show up, with the events attracting an average of 0.2% of shareholders. Most gatherings are also held during working hours, meaning retirees are typically the best-represented group, the study found.

There’s been a spike in demand for virtual meetings from markets including Australia and the U.K. as companies seek to respond to social distancing measures, said Lysa McKenna, co-chief executive officer for corporate markets at Sydney-based Link.

“Directors who’ve been nervous to engage solely through a virtual technology platform are now accepting that could be the only way to be able to engage with investors,” she said. “What’s changed here is this will become an acceptable form of a technology solution as a result of Covid-19.” Some clients have doubled or tripled attendance by offering virtual access, she said.

There’s a potential downside, however, according to Brynn O’Brien, executive director of the Australasian Centre for Corporate Responsibility. The online format could make it easier for companies to avoid repeated challenges on the same topic and limit opportunities to spar with directors, said O’Brien, whose group has frequently used annual meetings to demand greater action to address climate change.

There’s a danger of a “more constricted, narrower and less constructive debate” if companies use the tools to muzzle dissent, she said. “It may just end up being a piece of theater engineered by the company to be within their comfort zone.”

In response to the virus outbreak, some companies want to abandon in-person gatherings altogether.

“Our preference is for the AGM to be virtual only,” said Andrew Cole, chief executive officer of Adelaide-based copper producer OZ Minerals Ltd., which has offered web access for the past two years and is seeking legal advice to move a meeting scheduled for April 17 entirely online.

(Adds Rio Tinto decision in 8th paragraph)

To contact the reporter on this story:
David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story:
Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

Jake Lloyd-Smith

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