Love them or hate them, annual meetings come round like the changing seasons. And yet, quite unlike the move from fall to winter – when most of us choose thicker clothing – companies have wildly different attitudes toward their own perennial challenge.
To some, the aim is to minimize the risk of controversy and positively discourage the annual raid on the corporate wine and finger food buffet. To others, it’s the perfect opportunity to educate and to strengthen the link between consumer and investor. Success or failure at staging these events appears to be purely a matter of perspective. One seasoned IR practitioner from the UK privately confides that the ideal place to stage them is in the Outer Hebrides on a wet Wednesday in winter.
But this is a trifling distance to travel for those companies whose parents are of different nationality, for whom this statutory requirement is always a major logistical exercise.
Double trouble
Take ABB. Manfred Ebling, vice president of investor relations at the global technology and engineering company, says that over the past few years ABB has staged two consecutive meetings on the same day – one in Sweden, the other in Switzerland. Directors often make the trip from one to the other to address shareholders and answer their questions.
‘It’s really one of the key events in the year for a group like us,’ he explains. ‘We reach more of the general public than we can with our formal results announcement. Around 2,000 people attend each meeting, many of them smaller investors. We think we get quite good mileage out of the events because we try to offer a bit more than simply staging an annual meeting. For instance in Sweden this year we had a presentation of new successes in R&D and provided additional information to the annual meeting agenda.’
It is also one of the few meetings remaining in Switzerland which offers a sit-down dinner, adds Ebling. But in spite of the fine Swiss hospitality, there are always difficult questions raised. ‘Sometimes it’s environmental issues that come to the fore, sometimes it’s very general. Sometimes it’s shareholders who make a point of asking a question, whatever the issues of the day may be,’ he observes.
All companies have tales to tell of such recalcitrant shareholders. ‘We have two or three people who will be in the front row and you can almost guarantee they will ask a question,’ explains Simon Barratt, company secretary and legal services director at UK brewing and leisure company, Whitbread. ‘It’s not usually a question of detail on the report and accounts, but a lot of the questions we get are actually operationally-based – Why have you stopped brewing this beer? or Why do you do this in the Beefeater restaurants? I don’t think we have had a question about the remuneration report in the last two or three years.’
Food & drink
Three to four hundred people attend Whitbread’s meeting every year, mostly from the large contingent of retail shareholders. The nature of the company’s business means it attracts people with more than just dividends on their minds. Being a hospitality company Whitbread lays on ‘quite a lot of food and drink’ while senior managers join the directors to mingle with shareholders and answer questions from those who lacked the courage to stand up in front of the crowd.
Last year the annual meeting started earlier than usual to give people the chance to ask additional questions about the bid for Allied Domecq’s retailing arm, even though shareholders were not expected to vote on the matter there and then. Staging it earlier in the day proved to be a vexing issue for some who made a long journey to the annual event. Their objections have been noted, says Barratt, but by the same token the company is conscious not to pay too much attention to the ‘views of a vocal minority.’
Educating directors
Travel to a distant venue is a common chore for many investors, but the venue tends to be in or around the same corporate locality. Except, that is, if you’re an expanding online grocery company like Illinois-based Peapod eager to use the annual meeting for other purposes.
Senior vice president and chief financial officer Dan Rabinowitz says Peapod’s meeting is seen as an opportunity to educate directors about the business, which is why venues for the past two years since flotation have been in very different locations. ‘We purposely chose to put the annual meeting in San Franscisco this year – one of the cities we operate in – because this is one of the few occasions when the board meets. It was a perfect opportunity for them to see one of our newer warehouses.’
Around 75 external shareholders turned up to the annual meeting, which is not usually a long drawn-out affair – nor is there any intention that it should be. ‘We get in and out of the meeting as quickly as possible. It’s not meant to cater for individual investors. We obviously disclose where and when it’s going to be, but we don’t expect them or our significant shareholders to be there. And there’s no link at all between the annual general meeting and end customers for our products.’
Accordingly, Peapod – despite its involvement in the food industry – does not go to town on refreshments. ‘There may be a danish and coffee at the end, but we try to make sure we use our investors’ money prudently, which means that we don’t frivolously spend it in areas that we don’t need to,’ he adds.
Expensive tastes
For such a relatively small company as Peapod, cost is clearly an issue. But, as Hugh Morrison, international managing director at London-based business communications consultancy Financial Dynamics, points out, considerations of expense are also a significant issue with the big corporates.
‘Get a thousand people through the door and try and provide them with a dinner and all of a sudden it has made quite a significant dent in your profits,’ he says, adding that there are many reasons – other than culinary delights – which attract people to such an event.
‘The people who turn up to the Walt Disney meeting learn a lot about the company, because the event goes on for about four hours, but they also get a free ticket to Disneyland. In fact a lot of them come, get their free ticket and then go,’ he admits.
By contrast Mannesmann, the German engineering and telecoms conglomerate currently battling it out with Vodafone, concentrates on the key issues during its annual meeting. This year there may be quite a few of them. And there are certainly few – if any – ‘freebies’ on offer. Indeed, there is not a great deal of additional information of any kind – only that which is legally required or which helps shareholders when they need to vote.
But this doesn’t make the company’s meeting any more predictable. Contingency planning is always required, as the company’s annual meeting project manager, Paul Sehl, explains. ‘For the last annual meeting it was expected that more shareholders would come because the chairman of the board was retiring,’ he says. ‘We prepared some more rooms as a precaution. In fact, many more shareholders attended than in 1998.’ Even more can be expected this year – if, that is, Mannesmann still exists as an independent entity.
Still, the increase in numbers did not prompt a change of venue; the Congress Center in Dusseldorf was still capable of accommodating the audience. It’s a good venue, says Sehl, because of its technical infrastructure. ‘This year we introduced flat screens into the tables in front of the members of our supervisory and executive boards,’ he explains. ‘This enabled them to see exactly the same presentation as displayed on the large screens which the shareholder audience can see.’
Soft touch
Thousands of miles west in Seattle, the same principle is being applied by Microsoft. Senior director of investor relations Carla Lewis describes the annual meeting as a straightforward business event providing the usual update on the year’s business strategies and financial performance while also offering an outlook on the coming year.
‘As such this is not a marketing event, so we have not increased the marketing efforts around it,’ she explained. ‘As a courtesy we do provide shareholders with an opportunity to obtain information and see live demonstrations of our investor relations web site, product support and Windows 2000.’
And yet the company must be doing something to attract more interest because there has been a year-on-year increase in attendees – most of them retail shareholders. But it isn’t necessarily because the company is overly responsive to feedback from attendees. ‘Any feedback we receive from these events is carefully taken into consideration in the future year’s planning but often it’s not generally useful. Often it’s along the lines of Can we have more filling in the raspberry danish?’ notes Lewis with some amusement.
Of course, such sweet-toothed sentiments are sometimes the very reason why people attend in the first place – not to mention the occasional imposters who ‘gate-crash’ the corporate party. Organizers of many London-based annual meetings fondly call to mind a certain gentleman from an obscure asset management company who turns up quite frequently to savour the corporate hospitality. Very smartly dressed, he sometimes asks questions too. The only real giveaway is the sellotape he uses to keep his shoes together. Sellotape Man’s City office is apparently under the arches at London Bridge station.
‘There’s also a tall chap with a beard who is quite erudite and has a very worn coat,’ recalls Hugh Morrison of Financial Dynamics. ‘He turns up posing as a reporter from the Berkshire Press – which, of course, doesn’t exist. If there is a bar he can put away three quarters of a bottle of whisky inside about a minute-and-a-half. Then he goes and sits in a chair in the corner and sleeps.’
