After attending shareholder meetings for the first time ever, bank analyst Mike Mayo has developed a prescription for the ideal annual gathering – or rather, an Rx for companies that want to try to make their meetings useful and productive for serious investors instead of just an occasion for free food and coffee or other freebies. His five keys:
1. Location: Hold it somewhere that is easy for large institutional investors to reach. Memo to Goldman Sachs: That doesn’t mean Salt Lake City. Yes, it’s lovely that the bank has lots of employees there, but companies are run for the benefit of shareholders and the same rule should apply to annual meetings. In the same spirit, don’t save rows of the premium seats up front for management and employees. Make those spots available to shareholders, who, after all, are the company’s owners. Would you insist on labeling the front rows at a meeting for yourself and your colleagues and letting your boss stand at the back?
2. Take your time: Directors might want to get to the “real business” of committee and board meetings rapidly, and prefer to rush through the official annual meeting proceedings. Mayo urges them to “slow down.” Again, it boils down to recognizing who really owns the company. You don’t disrespect shareholders by telling them that internal board business is more important than their questions and their concerns, especially on the one day a year set aside for investors to meet with management and directors.
3. Prioritize: As anyone who has ever attended an annual meeting can testify, some questions are downright silly and others probably should be addressed in some other forum. If you’ve got a question about the fees Aunt Sadie is being charged, it might be more helpful for management to set up a booth in the lobby where that and other similar consumer-style queries and complaints can be handled more efficiently. Let’s face it: Those micro-issues may need high-level attention, but not CEO/board level scrutiny. Put the head of that business division behind the desk and let him tackle those questions before and after the official meeting in order to leave more time for the big strategic issues.
4. Accountability: At many companies, the heads of business divisions get their five or ten minutes in the spotlight at the annual meeting. Why not, Mayo suggests, extend the practice to board committee chairs? “Let’s hear from the people who oversee compensation, risk and other board committees, so they can tell shareholders what issues they see, what has happened in the past year, and so on.”
5. Food: It isn’t about the free food, says an exasperated Mayo. An annual meeting is a chance to hold not just management but directors accountable – and to do that, he is even willing to suggest that companies provide little more than coffee. Free food at annual meetings may be a sacred cow, but “it’s a distraction,” Mayo huffs. Stick to business.