Doug Chia on his Soundboard Governance blog writes about annual meetings in the time of COVIC-19.
I have to push back hard on my friends in the corporate governance community who are advocating for hybrid annual meetings as the floor of how to mitigate the risks and fears of the spread of Covid-19. We always need to balance numerous factors and competing interests in any discussion about corporate governance, but I disagree that in this case a compromise solution is the right place to arrive. Principles of shareholder democracy and guarding against the disenfranchisement of dissenting shareholders (in particular ones with small holdings) are important. It is true that some boards and management teams go out of their way to make it as difficult as possible for any shareholder to leverage the power of shareholder proposals and proxy voting, or even attend an annual meeting, to voice a dissenting opinion. The horror stories are just astonishing, and those boards seriously undermine everything that corporate governance professionals stand for. It is not “fake news.”
In a time of Covid-19—this dystopian movie in which all of us are extras—the ability to show up and confront the board in person at a shareholders meeting must take a back seat to the larger public health crisis that that is bigger than anything we’ve witnessed since Babe Ruth played for the Boston Red Sox. Social distancing is critical. What does social distancing mean? According to the CDC, it means “remaining out of congregate settings, avoiding mass gatherings, and maintaining distance (approximately 6 feet or 2 meters) from others when possible.” If school classes (including my 10-person seminar) are being moved online, why not shareholders meetings? If people are being advised to avoid airports, trains, buses, commercial flights, and hotels, why should we be insisting directors travel to shareholders meeting locations?