Banks are preparing for the next round of annual shareholder meetings, and they’re likely to be mostly virtual, as they were last year.
As they do, they have a host of things to consider: the state rules that govern whether they can hold any part of these meetings in person, the technology issues that can arise and the shareholder criticism and lessons learned from last year’s round of hastily put together online meetings.
The first question any meeting planner has to figure out is, do events need to be completely virtual or can they be a hybrid of virtual and in-person gathering?
The answers are not clear at this point: Every state has different rules, and those rules are in flux.
Some companies, like Bank First in Manitowoc, Wis., are making the call to go all-virtual.
“We wanted to make the decision early so we wouldn’t have to readjust our [Securities and Exchange Commission] filings and send out an additional notification to shareholders, which is what we had to do last year,” said Kelly Dvorak, general counsel at the $2.7 billion-asset Bank First.
The company decided in January that its June annual general meeting would be remote.
“I have a greater level of comfort going into this year’s meeting, and it feels good to have made the decision early so we can go forward knowing exactly what we are going to do,” said Dvorak.
Discover Financial Services, which has $112.9 billion of assets, decided in February that its May annual meeting would be virtual. Sheetal Shah, public relations specialist for the Riverwoods, Ill., company said that the event was well-attended last year, which lent comfort to going this route again.
Many banks seem to be taking the same approach.
Cathy Conlon, head of corporate issuer strategy and product management at Broadridge Financial Solutions, a provider of specialized virtual meeting software, expects that all financial services firms that used the Broadridge platform last year will return. Computershare, another provider, expects that more than 60% of its U.S. banking clients will hold a virtual meeting this year and estimates that 20% have not yet confirmed their arrangements.
Jonathan Hightower, partner at Fenimore, Kay, Harrison & Ford in Atlanta, a law firm that counsels hundreds of banks, says it’s a mixed bag among his clients. Some are sticking to virtual while others are scaling back their in-person events with a short presentation, no reception and a recording for those who couldn’t make it.
“For this year, companies like the certainty of virtual because there continue to be restrictions on large gatherings in person,” said Helena Grannis, counsel at Cleary Gottlieb Steen & Hamilton in New York.
The loss of in-person events may be palpable among bank shareholders, who are a vocal lot.
“The vast majority of banks are community-oriented entities. The shareholder meeting was often positioned as a community gathering, and a very positive one,” said Hightower. “There is a bit of mourning in some cases that this is yet another thing we can’t get together for that we really valued.”
The next question is, what have companies learned from
Companies of all types were largely pleased with how smoothly virtual meetings ran in 2020, but there is still a strong sentiment among shareholder rights organizations that remote gatherings don’t let investors stand up and be heard.
In a July interview, Sanford Lewis, director of the Shareholder Rights Group, recalled situations in 2020 where shareholders submitted questions that seemed to have been skipped over and lamented the loss of side conversations.
“A lot of the important business happens alongside the formalities,” Lewis said at the time.
Banks that have settled on or are still contemplating the virtual route can take several steps to make sure these meetings go as smoothly as possible and appease virtual meeting critics, from detailing the parameters of when and how shareholders can ask questions to ensuring that meetings will be broadcast on video rather than restricted to audio.
Choosing the right virtual meeting technology is critical.
Companies (including banks) searching for a technology provider should ask themselves how they want to conduct the meeting, said Sherry Moreland, president and CEO of Mediant, an investor communications company in New York. “Do they have a chat feature for the Q&A? How are those questions prioritized? Do you want to show a PowerPoint presentation? Do you want directors on camera?” she said.
She recalls three major criticisms of meetings in 2020: audio-only events that felt like conference calls, where investors couldn’t view presentations; confusion over how questions and answers would be handled; and lack of clarity over how some shareholders, such as investors who held their stock inside of a brokerage account, could access the meeting.
Grannis said the ability to pose questions is particularly important at bank shareholder meetings. That makes it critical to detail instructions in the proxy materials about how and when attendees can ask questions, rather than issuing generic statements like “shareholders will have the opportunity to ask questions.”
“You can hear from management but the ability to go to the microphone and ask your questions and know the directors are hearing it is what shareholders are most focused on in the virtual world,” she said.
Bank First will use GoToWebinar as its meeting platform, as it did last year, and accept questions in advance. The company used a third party to help with some technical matters last year — for instance, lighting and ensuring the four executives who would assemble in person were visible on screen — but this year Dvorak says she and her colleagues feel comfortable handling that part themselves.
What shareholder meetings will look like post-pandemic is anyone’s guess.
Last year, executives from both Bank First and Discover reminisced about the value of personal interactions during meetings, even though the online versions went smoothly.
“There is still a strong sentiment in the investor and proxy adviser space that while there are benefits to virtual meetings, they would prefer some sort of hybrid form post-pandemic,” said Grannis. “There is still skepticism from the investment community that the virtual meeting process is as good for investors as the in-person process where you can stand up and be seen and heard.”
