Little strikes fear into the hearts of corporate management as much as the annual meeting. The yearly rite of passage is often viewed by CEOs with as much enthusiasm as a trip to the dentist.
Facing the shareholders can be a daunting experience. And the annual meeting is even more frightening when the company has underperformed. Today’s shareholders tend to be vocal, and the CEO is usually the target of their discontent.
No wonder some CEOs suggest that the meeting be moved to a small island, beyond the reach of shareholders. Happily, most publicly-traded companies do not go that far. They hold their meetings in a venue close to the corporate headquarters; notify shareholders as required by proxy mailing and in the annual report; prepare an address by the chairman and CEO; and then fervently hope that only pensioners will show up.
Most CEOs wish for a meeting that is as short as possible, goes totally according to script, with no questions or only carefully-planted questions from shareholders. They see it as something to be carried out as quickly and painlessly as possible according to pre-ordained rules.
Conventional practice tends to put the meeting under the control of the corporate secretary. As a result, the focus is usually on statutory requirements rather than strategic communications. The CEO tries to minimize face-to-face interaction with shareholders. And the cost of the meeting is kept to an absolute minimum.
However, a growing number of companies are beginning to see the annual meeting as a communications opportunity, rather than a legal necessity. That means working hard to ensure that the meeting communicates effectively to those attending. Some enlightened executives even look to the meeting as a major IR event, attempting to:
- maximize attendance;
- communicate effectively what the company is, how it has performed, where it is going, how it is going to get there, and what this means to the investor; and
- export that ‘communication’ beyond the confines of the meeting.
Companies that fall into this category are usually headed by a confident CEO who relishes interaction with shareholders and appreciates the benefits of a strategic IR program. That kind of CEO supports the meeting with an appropriate budget, too. Really effective annual meetings are marketed to broader constituencies and tend to be coordinated by the corporate communications or IR departments.
If the intention is to maximize attendance at the meeting then executives must take the view that face-to-face communication with shareholders is desirable.
Minnesota Mining and Manufacturing Company (3M), for example, attracts about 4,000 long-term shareholders and retired employees to its meeting in Saint Paul, Minnesota. Donald Frenette, executive director of public relations and government affairs, describes the meeting as ‘a kind of homecoming and rite of Spring’.
London-based Crown Business Communications regularly assists major UK companies with high profile meetings. It points out that the privatized, consumer-oriented companies can draw significant attendances: British Telecom drew some 4,000 shareholders to its first annual meeting.
But large attendances are not secured by merely listing the annual meeting date and venue in the annual report, or by the normal proxy mailing route. A letter from the CEO to all shareholders within a reasonable radius of the annual meeting venue is likely to be more effective. This can be useful when the meeting is moved from city to city each year in order to cater for the more remote clusters of shareholders.
Alternatively, the company can seek to serve its locally-based employee shareholders. Deere & Company in Moline, Illinois, holds its annual meeting every year at company headquarters. According to Robert Combs, VP corporate communications, ‘we invite all employee shareholders to attend and usually several hundred do.’
Several US companies invite non-shareholder guests to the meeting, including community leaders, security analysts and the financial press. Arvin Industries in Columbus, Indiana, uses the evening prior to the meeting to host a dinner for a wide variety of community stakeholders, at which a top-level outside speaker is invited. And some large cap UK companies – again, these are mainly the privatized utilities – have staged smaller scale versions of their meetings several times over to serve their constituencies in various parts of the country.
Those who do attend annual meetings have a right to expect effective communication from the executives on the platform. But adding something extra to what is being said into the microphone can really make a difference. Many companies in the UK regularly use substantial exhibits and displays outside the main auditorium for shareholders to view an hour or so before the main meeting begins.
A few companies even use interactive displays to assist shareholders in obtaining the information they want. Among the most interactive is that of Maytag Corporation in Iowa, a leading household appliance manufacturer, which includes working product displays. To date, no shareholders have brought their dirty laundry to the Maytag meeting, but that may be the next step.
Presentations by key management are popular, too, lavishly illustrated with slides or video on huge screens that everyone can see. Maytag, according to Thomas Schwartz, vice president corporate communications, stages ‘its management presentations as analyst meeting presentations, to answer the question: why invest in Maytag’.
Other companies use outside speakers. McDonald’s Corporation turned to olympian Jackie Joyner-Kersee last Spring to stress McDonald’s sponsorship of the Atlanta Olympics. John Brown, vice president of Arvin Industries, brought in Richard Grasso, chairman of the New York Stock Exchange, as well as the company’s stock exchange specialist, to explain via video the working of the NYSE as it related to Arvin’s common stock.
Refreshments at annual meetings are notorious for attracting shareholders for all the wrong reasons, but they can be used to reinforce corporate identity. The options are there whether you go for the simple box lunch or sit-down luncheons. Some companies go one step further and hand out gifts. These range from a large gift box of assorted household paper products, as in the case of Scott Paper before its acquisition, to Cowles Media’s giveaways carrying the new corporate logo.
Hershey Foods, one of the world’s leading confectionery companies, combines refreshments and gifts into one. It offers its shareholders a one-day discount tour of Hershey’s Chocolate World, its Disney-like visitors center, on the day of the meeting.
In today’s ‘global village’, an increasing number of companies are exporting the meeting beyond the confines of the venue.
McDonald’s has overflow rooms and videos the annual meeting for shareholders who have arrived late and cannot be in the main hall. It also transmits the meeting to the office so employees can take part without straying far from their desks.
Many US companies publish a post-meeting report with extracts of the presentations, selected questions, and decisions taken at the meeting. Goodyear Tire & Rubber Company in Akron, Ohio publishes three interim reports a year, including a summary of the annual meeting in the next interim report. Maytag and Niagara Mohawk Power Corporation in Syracuse, New York supplement the interim report approach with coverage of the meeting as part of their employee communications program. Deere & Company is adding the annual meeting to its Web site for those who desire instant access. And McDonald’s posts its annual meeting press release on its home page.
Other companies have turned to video distribution as a means of reaching outside the immediate audience. 3M gives employee shareholders an edited video of the meeting on request. And it transmits the video on the employee television broadcast system in place at multiple sites on its sprawling Saint Paul campus. Niagara Mohawk and McDonald’s also offer employee shareholders a video of the meeting.
Live video transmission via satellite is another option for communicating to a remote location where shareholders congregate. One adventurous UK corporation reportedly paid for an hour of local access television time to broadcast its annual meeting to the investing public.
New dissemination techniques are coming into play as technology broadens access. Shareholders can now use a toll-free telephone number and listen ‘live’ to what is happening at a meeting thousands of miles away. For those who miss the opportunity, the same number can be dialled later to hear a tape of the meeting. Indeed, as companies now experiment with CD-Rom for their annual reports, it will not be long before the meeting finds its way to this medium as well.
Strategic IR is concerned with proactively communicating focused messages to a targeted investor audience so that they perceive a company as a valued investment. The goal is to have the investment community take actions toward the company that are supportive of it. The annual meeting is a major weapon in the IR arsenal that can make a significant contribution to that end. Use it wisely and your company will reap the benefits. About the author: Philip J Webster is president of The Webster Group Inc, Philadelphia-based consultants in investor relations, corporate communications and public affairs to corporations in North America and Europe.
