Why Is It Essential to Have an Agenda Before a Shareholder/Investor Meeting?

Nicholas J Price
Financial regulations require boards to hold an annual meeting. Additionally, board chairs may also arrange for special meetings when the discussion of important matters can't wait for the annual meeting. Annual meetings are to be held on the same date each year, according to the wording in the organization's bylaws. Certain issues like potential mergers, acquisitions, restructuring, bankruptcy or other urgent matters signal the scheduling of a special meeting. Shareholders have a right to receive important information when issues affect the value or success of the corporation.

Shareholder meetings are sometimes rife with dissension and strong opinions. Parliamentary procedure outlines the protocols for managing a jam-packed agenda where many individuals want to be heard, so that everyone gets a fair chance. An agenda serves the board chair well before and after the shareholder meeting. The board chair also relies heavily on the agenda as a tool to keep things orderly and under control, especially when the discussion of agenda items get heated or items are hotly contested.

Shareholder Meetings Can Take on Various Tones

Annual meetings take on many different forms, depending on the company. Under the best of circumstances, shareholder meetings are focused and succinct. However, when the agenda lists items that have opposing sides, shareholder meetings can be lengthy, or even extend to a subsequent meeting date. As teleconferencing and proxy voting become increasingly popular, many shareholders are taking advantage of the opportunity to attend meetings remotely. Board chairs typically schedule board meetings during the workday, so many shareholders find that they can attend shareholder meetings and offer their opinions and not miss days of work for the meeting and travel time.

Some large corporations like to make the annual meeting a festive affair, with a limited amount of time scheduled for the meeting itself. These events often include carnival rides, complimentary food and entertainment for the whole family.

Addressing Important Agenda Items to Shareholder Satisfaction

Corporations almost always elect one or more board directors at the annual meeting. For many corporations, the annual meeting centers around the election. Shareholders also vote on other important matters, such as approving an accounting firm to review the company's financial records.

Company managers or shareholders can offer up proposals for the board chair to add to the agenda, and they can also request to speak and offer their perspectives on the issue.

Some of the more common recent concerns that shareholders have brought forth include environmental issues and benefits for same-gendered life partners. General Electric has been facing pressure from some of its shareholders to stop making components to construct land mines.

Boards of directors also hold the responsibility for setting and approving executive director salaries, which have historically been very high. Shareholders are increasingly expressing concerns that employee salaries have either decreased or remained the same, while director salaries remain disproportionately high. Even when shareholders express their concerns, boards of directors sometimes overrule them.

Large financial institutions and pension funds usually have the lion's share of stocks, making them quite powerful. When they band together for or against an issue, they can quickly squash any dissent.

Parliamentary procedure gives board chairs an opportunity to take votes from the floor. While this protocol is allowed, many believe that overusing the practice is poor governance. When issues arise on the floor, absent members don't have a chance to vote at all. Shareholders haven't had the proper amount of time to vet an issue and to form an opinion before they face a vote on it. Floor votes may pass on the floor prematurely, before issues have been debated by the full board.

Formal Notice of Shareholder Meetings

The corporation's bylaws state when the annual meetings will be held, so it's technically not necessary to provide a formal written notice of shareholder meetings. However, most corporations require formal written notices as a matter of protocol and to protect themselves legally.

Official notices of shareholder meetings are typically dry and follow a static template. In addition to the date, time and location of the meeting, the agenda usually also lists any teleconferencing or videoconferencing information. It also lists the items on the agenda, so that board members will come to the meeting prepared to discuss them.

Using the Agenda to Maintain Control of the Shareholder Meeting

Depending on the tone of the shareholder meeting and whether it's an annual or a special meeting, investor meetings can be brief or extremely long. Berkshire Hathaway is one of the largest financial institutions and their annual meetings are very scripted and only run for about 20 minutes.

The bylaws outline the procedures for shareholders who wish to make proposals or statements, including time limits for speeches. The board chair and the secretary need to be mindful of the clock and keep things moving along to ensure fairness when the agenda lists many topics or when agenda items will be debated strongly. Shareholders have the right to request time on the floor, make observations and offer up proposals for consideration, but they must speak concisely and respect their allotted time.

The board chair needs to guide discussions without letting outspoken individuals or remote attendees control the pace and tone of the meeting. Experienced board chairs know how to manage situations like interrupting a speaker, addressing repetitive speeches and disallowing unauthorized speeches. The board chair may stop a shareholder from impeding other participants, address offensive behavior, and note speech or actions that work against public order or conflict with the corporation's values. Where appropriate, the board chair has the authority to deny an attendee from speaking altogether.

Wrapping Up the Essentials for the Agenda for Shareholder/Investor Meetings

In addition to being a board chair's favorite meeting tool, having a strong and strategic agenda protects the board directors and the corporation from potential lawsuits by disgruntled shareholders who become frustrated after a shareholder meeting where they never got an opportunity to express their views and concerns.

While there is much for the board chair and the secretary to do to prepare for a shareholder meeting, they also have tasks to perform after the meeting. Many board chairs find it helpful to debrief with the secretary after the meeting to discuss problems, solutions and the success of board meeting protocol. The takeaways will surely make the next meeting more productive and less stressful for the board, management and shareholders.
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Nicholas J. Price
Nicholas J. Price is a former Manager at Diligent. He has worked extensively in the governance space, particularly on the key governance technologies that can support leadership with the visibility, data and operating capabilities for more effective decision-making.