Among the buzzy and weighty topics on the agenda at Disney’s annual general meeting (AGM) in early April, one shareholder proposal centered on a little-known and rarely sought medical treatment. An advocate for an anti-trans lobbying group argued that Disney’s health benefits should cover detransitioning treatments for workers who want to reverse gender-affirming care.
Nell Minow, vice chair of ValueEdge Advisors and a corporate governance expert, says the proposal, delivered with a personal testimony, didn’t feel relevant. “It’s hard to say that it had anything to do with what was going on at the annual meeting,” she tells Fortune.
Indeed, the idea went nowhere, like many similar submissions aimed at undoing ESG and DEI goals at large companies. In 2023, anti-DEI campaigns helped boost the number of shareholder proposals submitted at AGMs to new highs.
Now Jamie Dimon, CEO of JPMorgan Chase, is taking aim at AGMs, complaining that they’ve been hijacked by attendees who aren’t acting in good faith. In his 2023 letter to shareholders, published Monday, Dimon wrote that annual general meetings have fallen victim to “spiraling frivolousness” and need to be reformed.
Companies are legally obligated to hold annual meetings, which give shareholders the chance to vote on important issues, elect a board of directors, and debate shareholder proposals. But Dimon says these meetings have mostly become a “showcase of grandstanding and competing special interest groups,” and he encourages companies to “come up with a far more constructive alternative.”
No other options
Dimon’s sentiment may resonate with other CEOs who have faced shareholder calls over soaring executive pay, separating the chair and CEO role, a company’s climate failings, or other hot topics.
But Minow says there is no viable replacement for the AGM. “It’s the only opportunity the shareholders get to look the board of directors in the eye and ask them some tough questions,” she says. Still, she acknowledges that the meetings can stray off course. “I understand that they don’t like those questions, partly because some of the questions are a bit far-fetched.”
Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, agrees. Companies engage with big investors all year, he explains, but the annual meeting is a key forum for individual investors: “No one is going to talk to one shareholder or 10 shareholders except at the meeting.”
AGMs are also healthy grounding exercises for board members. “For directors, it’s important to show up once a year and face your maker,” Elson says. Seeing shareholders instills in board members a sense of accountability that wouldn’t be as visceral if these meetings happened entirely virtually or asynchronously.
Flip the script
That doesn’t mean CEOs are stuck with the current AGM format. Doug Chia, president of Soundboard Governance, a consulting firm for boards, suggests that if CEOs are concerned about shareholder gadflies and others stealing the show, they need to be creative in making the company’s contributions to meetings more compelling.
Today, many companies hold hybrid meetings that last 30 minutes to an hour, are held on a weekday afternoon, and require that attendees sit through dry presentations, says Chia. Shareholders may not even see a company’s CEO. Often, the chief executive is represented by a disembodied voice speaking over slides.
Companies also rarely allow the Q&A portion of a shareholder meeting to run overtime so that every retail investor with a question can have it answered. Instead, the company usually wraps up the sessions abruptly, Chia explains: “You have no idea how many questions they left in the queue.”
Compare this norm to Berkshire Hathaway’s annual shareholder meeting, which has famously grown into a kind of yearly corporate Woodstock in Omaha. For years at these confabs, CEO Warren Buffett and his former right-hand man Charlie Munger would dedicate several hours to Q&As with shareholders. (Munger, known for his witticisms and market insights, died in November at 99. Next month’s annual meeting will be the company’s first without him in decades.)
Chia also praises Microsoft for its AGMs, which involve executives—CEOs and board members—who appear on stage for interviews. Shareholders submitting proposals are invited to send videos making their case, he says, and executives answer shareholders’ questions candidly, making the experience memorable.
“The problem is that most companies are putting in minimum effort,” he says, “so, of course, the people who are the noisiest are going to dominate the show.”
Chia also advises executives to tell shareholders something they don’t already know and cautions against rehashing information that has been previously shared in filings and reports.
A thought exercise
Matt Fullbrook, a corporate governance researcher at the University of Toronto and host of the One Minute Governance podcast, also defends the AGM. Despite its imperfections, he can’t imagine an alternative that would satisfactorily stand in for an annual meeting, given its importance to individual shareholders.
Yes, some people who attend AGMs are disingenuous, Fullbrook admits, but a company can’t read shareholders’ minds, so there’s no way of knowing who has real concerns deserving of attention and who’s grandstanding until people are given their say.
That said, he welcomes Dimon’s critique as an invitation for debate. “It’s useful for someone with a loud voice to say, ‘I don’t think this is working well,’” he says. Now companies can clarify the yearly rite’s objectives and tweak it to create a more fruitful forum.
