Significant technological shifts, assertive regulators, and increased public reporting transparency are reshaping how boards and management interact with shareholders. This transformation has also sparked a surge in activist engagement, amplified by 24/7 news and social media, which modify and magnify stakeholder perceptions.
Today, company annual general meetings (AGMs) are conducted mostly as virtual shareholder meetings (VSMs). On the screen, there is a mix of dark-suited board and executives, employees rehearsed to ask specific questions or second motions, retired personnel counting on continued dividends, a few favorably disposed institutions, and media ready to cover any conflict or news.
Annual meetings are not just a legal obligation but also the most visible interaction between boards and shareholders. According to Swatika Rajaram, the SVP of proxy at leading global VSM provider Broadridge Financial Solutions, ” Companies have hosted thousands of VSMs in the last several years … as they provide greater shareholder participation and allow investors with time constraints or travel restrictions to virtually participate and vote from anywhere through multiple digital channels. Additionally, they lower travel and meeting costs, as well as the carbon footprint.”
In short, VSM helps everyone. However, activists and gadflies that may own a single share of stock are at the ready, seeking to be the center of attention and perhaps even disrupting the meeting.
In recent years, the U.S. Securities and Exchange Commission’s (SEC) directives have centered on issues emphasized by the current administration and media coverage. Unfortunately, social issue crusaders are jumping on this bandwagon–and they will remain active, before and beyond this spring proxy season.
Navigating an increasingly complex and digital world
AGM questions should not be a surprise. They are not hard to predict. You just need to know where to look.
Today, most questions and issues raised are posted for months on social media and other platforms by various advocacy or constituency groups.
There is little doubt about which issues will prompt investors to pursue more detail or change in strategic direction, the array of concerns unions will be stimulating, that disgruntled or former employees will be hiding in the shadows, along with all those seeking exposure for their special issue.
What’s changing is that crusades against corporations are no longer limited to a few weeks before the AGM. Instead, they have become year-long, coordinated, digital movements aimed at capturing engagement, inspiring headlines, and influencing company policies.
Digital tactics coming at AGMs with warp speed
Despite many AGM rehearsals, management and staff often overlook the new digital strategies deployed by advocacy groups. Having a skilled team is crucial to monitor these movements and be able to respond–before, during, and after the AGM–to adversity groups, who often capture audio or video clips and share them along with alternative commentary. Additionally, pre-prepared clips serve as a megaphone for these crews offering unconventional observations against company positions and capitalizing on the AGM spotlight.
In this emerging era of artificial intelligence (AI), anyone can now deploy deepfake audio or video clips, further posing a threat to the AGM, business operations, or causing potentially severe consequences.
Regrettably, a significant number of corporate cultures, business leaders, and advisors are simply not organized to operate at digital warp speed.
Quiet is so last year
Current global conflicts and strife will inevitably influence proceedings as the impact of politics, policies, and broader challenges related to the industry or geography will be reflected in the discussions raised at AGMs.
This spring, there will not be just one topic that captures emotions and headlines. Rather, there will be a series of themes that need crafting and rehearsals as pointed and precise questions will be put forward not only to the board chair but also to committee chairs and management.
As you can guess, regulators will be monitoring company responses closely, looking to highlight, criticize, or worse.
Usual suspect questions include: business changes and financial affairs, the effect of interest rates and an uncertain economic outlook, executive compensation, ESG and climate change, cybersecurity, and ongoing supply chain delays, among others.
The emerging issues that will pop up include: geopolitics, board seats, donations, and partnerships with specific universities, the upcoming 2024 U.S. presidential election, political contributions and commentary, artificial intelligence, marketing approaches and campaigns, customer behavior, and hiring veterans, to name a few.
This year, a key question could be what the company’s most immediate threat is, as well as its biggest opportunity, and how the board and management have organized to address both.
Does your company command admiration?
For more than 25 years, Fortune has published its America’s Most Admired Corporations list–and quality of management has been continuously the most important attribute.
AGMs present an opportunity to tell the company’s story, showcase the excellence of its management, and distinguish their skills and vision from competitors, as well as demonstrate how shareholder value is created and built. Alternatively, several careers have taken sharp turns as a result of flawed AGM performance.
While oversight responsibilities must continue to be the board’s primary focus, directors–not unlike CEOs in recent years–will need to be prepared to understand and spend more time dealing with public issues.
The quality of the board of directors will become a more important point of measurement for security analysts, investors, rating agencies, bankers, and others.
In a recent conversation I had with Alan Guarino, the vice chair of Korn Ferry, he highlighted the evolution of boards. “The time when boards were primarily made up of former CEOs has ended. Today, boards strive for a diverse amalgamation of backgrounds and skills, encompassing a mix of talent.”
“This involves current and retired executives proficient in conventional domains such as accounting, audit, global business, and marketing … while also integrating expertise in emerging areas like digital media, cybersecurity, and risk management. This composition provides a broad spectrum of expertise and information for both management and the board to leverage and rely upon, “ he concluded.
An evolution leap is underway. Boards, management, and advisors must reimagine and transform shareholder interactions in the digital and virtual realms.
Richard Torrenzano is CEO of The Torrenzano Group, which helps organizations take control of how they are perceived. For nearly a decade, he was a member of the New York Stock Exchange Management (policy) and Executive (operations) Committees. Broadridge Financial Solutions is a client of The Torrenzano Group.
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