Brief Observations on the 2019 Proxy Season

From our work as Inspector of Elections at numerous annual meetings every year, we have noticed a few recent developments we thought worth sharing:

  • Institutional and retail shareholders alike are increasingly adamant about transparency in the C Suite, articulated both in proxy materials and at the annual meeting itself.
  • There is a palpable, healthy nervousness among executives and board members attending annual meetings these days, stemming from a desire to show proper attention to and respect for participating shareholders.
  • While the screeching gadflies seem to have exited stage left (for now), more sophisticated champions of the little guy like John Chevedden and James McRitchie have dug in to keep corporate managements on their toes at annual meeting time – and they are achieving creditable results with their multi-media campaigns and shareholder proposals.
  • Even with the routine meetings we tend to inspect, executive management (through the Corporate Secretary and his/her staff) is taking extra steps to ensure all the proper ducks are in a row at annual meetings, procedurally and with respect to preparing and providing proper documents.
  • With regard to the latter point, there seems to be no question now that the ballot of appointed proxies (aka master ballot) must be signed by the proxy committee before the meeting starts, the “omnibus proxy” from DTC must also be in hand, the registered shareholder list from the transfer agent must not only be available but also certified by the agent, the Inspector of Election’s signed Oath must be properly notarized in advance, procedures for screening attendees are well known to staff at the check-in table, steps for handling a disruptive shareholder and other anomalies have been fully anticipated and are included in the meeting script, a sign-in sheet has been filled in by every meeting attendee, etc.
  • The increased webcasting of annual meetings shows a desire for more access to meetings by more people, further enhanced by the fact that such webcasts are archived for future viewing.
  • And ironically, the rise in virtual shareholder meetings (VSMs) has fit nicely into this more fulsome embrasure of proper procedures and transparency – precisely because any failure in this area would be leapt upon by the VSM naysayers. In other words, VSMs are perfect for a lot of companies, and the last thing they want is to jeopardize the associated efficiency and convenience (both for themselves and their shareholders) by appearing to have overlooked proper procedures, documentation and access to management.

All of this, of course, is just one piece of the ever-expanding corporate governance matrix.  But it is a very important – and visible – piece.  More to follow on this subject here, in the months and years ahead.