Tuesday, June 16, 2009

Ten Things That Happened This Proxy Season Worth Noting

Broc Romanek, Editor of TheCorporateCounsel.net Blog has done a nice job of compiling ten developments that he believes will lead to more heated online shareholder activism campaigns next year.

1. First Use of Live Internet Voting - In his "IR Web Report," Dominic Jones brought us the news (and analysis) that Intel decided to tackle the challenges of allowing for "live" voting online at its annual shareholders meeting this season. Intel also has this "Stockholder Forum" to allow shareholders to submit queries in advance.

2. Soliciting Shareholder Feedback on Compensation Practices - Taking a page from Schering-Plough's efforts to survey investors about pay practices, Amgen is inviting its shareholders to offer comments on TIAA-CREF's "Ten Questions for Evaluating CD&As." The invitation is presented on page 51 of the company's proxy statement (page 59 of the PDF), directing shareholders to a survey questionnaire on the company's site.

3. Soliciting Shareholder Feedback on Disclosures - Barclays used this "2009 Annual Report Survey" to solicit feedback on its annual report. The company promised to provide responses directly to the questioners - and intends to post a selection of them.

4. Emergence of Proponent Sites Designed to Solicit Mutual Funds - ExxonMutualFundShares.org is a new type of site, jointly created by the proponents of four ExxonMobil shareowner proposals (Bob Monks among them). Mutual fund holders who are concerned that ExxonMobil has not done enough to address climate change and address certain corporate governance issues can send a message to the 25 largest mutual fund families through the site.

5. Easier Ability to Track Voting Results - Smart companies like to predict how their voting results will be at shareholders' meetings so that their board and senior managers are not surprised. Hiring a proxy solicitor that has shareholder intelligence abilities is the most common way to accomplish this - but some of the tools that solicitors use are now freely available. For example, a relatively new site - FundVotes.com - tracks how mutual funds vote on specific types of proposals. And it's free. The site tracks both management and shareholder proposals - and it tracks voting trends by specific fund families.

6. Use of "RSS Street" to Follow Developments - Dominic Jones blogged about the rise of a group of web monitoring services that help investors track online mentions of companies they follow. Companies should be doing the same to understand what is being said about them as the online media gradually displaces traditional mainstream media.

7. Use of Corporate Blogs (and Third-Parties) to Solicit Questions - As noted by Dominic Jones in his blog, Microvision used its blog to solicit queries for its upcoming earnings call. The same can be done for annual meetings. In fact, Warren Buffett tried something novel this year - soliciting queries by asking Berkshire Hathaway shareholders to send them to three reporters via email. As described in Warren's annual letter to shareholders, these reporters - independent third parties - then choose the ones they deemed most interesting and important and posed them during the meeting.

8. Use of Twitter to Describe Live Events - Ebay became a pioneer when its resident corporate blogger tweeted the details of its earnings call as it happened, as described by Dominic Jones in his blog. Again, this can be done for annual shareholder meetings - and it helps if the company controls the messaging rather than only have third-parties tweeting during the event (which is becoming more common, like it was during Banc of America's annual meeting this year. I'm not sure how they enforced it, but I hear that live-tweeting and blogging was banned from Target's annual meeting yesterday. If it's true, I think it's not a good idea as that can garner bad publicity and will happen anyways).

9. Investors Communicating Through Social Sites - Another area where companies increasingly are going to have to keep an eye on are the social sites. Beyond the obvious ones - Facebook and MySpace - there is a new player, Broadridge's "Investor Network." It's too early to tell if their social site will really take off, but it's safe to say that social sites generally are here to stay and the likely place will a lot of shareholders will be venting in the future.

10. Much Easier Use of Video Changes Everything - With everyone now walking around with a camcorder in their pocket (ie. their cell phone), no one should presume that what happens at the annual meeting, stays at the annual meeting. As brought to my attention by this blog, an embarrassing moment at an annual meeting could cost an inhouse lawyer or corporate secretary their job. Be prepared for zaniness at meetings by being prepared.

This video below from Fortis' annual meeting - held a few weeks ago - is real and is a "must" viewing. The meeting was delayed a half hour after the management team was pelted with shoes, coins, etc. I particularly liked the dismissive shake of the Chair's head. Sometimes it’s uncanny the way that corporate life imitates Monty Python (remember this "Stoning" sketch):