Inside Scoop: Virtual Annual Meetings - Tips to Help Ensure Success

Kathy Jaffari is joined by Cathy Conlon, Vice President and Head of Corporate Issuer Product and Strategy at Broadridge Financial Solutions, Inc., on the Inside Scoop for a conversation on the virtual annual meeting landscape. The discussion provides insight and guidance on how to have a successful virtual annual meeting as well as how to avoid pitfalls and challenges.

 

Transcript

Katayun Jaffari:

Hello everyone and thank you so much for joining us today on Inside Scoop, a new series brought to you by Cozen O'Connor. Welcome to your 30 minutes of getting the “Inside Scoop” from experts in corporate governance and securities, and learning some tips of the trade to solve the most pressing problems faced by board members, executives, general counsel, and compliance officers.

Katayun Jaffari:

I'm very happy to introduce you today to Cathy Conlon from Broadridge Financial, the company that pioneered the first commercial virtual meeting platform in 2009, and has been the leading provider of this technology in the United States. She will be sharing with us her thoughts on the virtual annual meeting landscape. Today our topic is virtual annual meetings and tips on how to get there.

Katayun Jaffari:

As Chair of the Corporate Governance & Securities Group here at Cozen O'Connor, I've had the privilege of advising clients with respect to their proxy statements and annual meetings. Fortunately, I've also had the opportunity to work directly with Broadridge on many occasions, especially over the last year when clients were turning meetings into virtual meetings as a result of the pandemic.

Katayun Jaffari:

With the substantial majority of companies having held virtual meetings in 2020, and already beginning to hold their annual meetings in 2021 virtually, we thought it is an important topic to get some tips about how to have the best virtual annual meeting possible. And this is where Cathy comes in to help us.

Katayun Jaffari:

Cathy is Vice President and Head of Corporate Issuer Product and Strategy for Broadridge's $3.5 billion investor communications solutions division. It's there that she oversees the development and execution of the business and growth strategy. So Cathy, thank you so much for joining us today on Cozen O'Connor's Inside Scoop.

Cathy Conlon:

Thank you so much for having me. I really am happy to be here with you.

Katayun Jaffari:

I'm hoping you could provide us with some practical thoughts and guidance on the topic of virtual annual meetings, including the pitfalls and the challenges you might have seen during the 2020 virtual annual meeting season and, maybe, already. I know I have a number of clients who, in January and February, held their virtual meetings. I think it might be helpful though, to set the stage a little bit and I'd like to start with last year. Do you mind sharing with us some of the what you saw regarding annual meetings?

Cathy Conlon:

Sure, happy to do that. So, obviously it was a big year for virtual shareholder meetings last year. We did, on our platform, about 2,000 meetings last year. That was a significant jump up from the 326 we had done in 2019, and the 400 that we were planning for in 2020. And really, the big jump started in April—give or take. Up through March, companies had stuck with their original plan, which was in many cases to have a physical meeting, but that quickly switched. So we saw roughly 2,000 happen.

Cathy Conlon:

The statistics we usually talk about are whether the company was doing an audio versus a video meeting. In 2020, it was mostly audio meetings. In large part, that was because it was the quicker and easier path for many companies to do an audio meeting. That's what we saw. I would say 99% of the meetings that we saw were audio meetings.

Cathy Conlon:

The other decision prior to 2020 that companies had to think about was hybrid versus virtual only. Meaning virtual only – a purely virtual, digital meeting – no in-person component versus having a hybrid meeting, which in many cases is considered the best practice. Again, close to a hundred percent, because of COVID, were virtual only meetings. The numbers were really strong. We saw quite a lot of companies switching to virtual meetings last year.

Katayun Jaffari:

And Cathy, I'm really curious, the statistics... First of all, to ramp up from 400 to 2,000,... How was Broadridge able to meet that? Did you have to actually hire more people or did you actually have a structure set up where you could meet that demand?

Cathy Conlon:

Well, that's a really great question. So obviously planning for 400 and doing 2,000 is a big thing, but I'd say that the things that were going in our favor were that we were the most experienced and continue to be the most experienced provider of this. Having done it for 10 years, even though we had only done a couple hundred, it certainly gave us the experience to be able to guide companies. And we had provided meetings for companies of all sizes in that 10 years—large, medium, small with all sorts of scenarios. That experience really helped us.

Cathy Conlon:

We quickly figured out that one of the big issues we were going to have is just educating companies and their counsel on how this was going to happen. We started doing twice a day educational webinars where we invited whoever wanted to come on and ask questions, and we explained the process. We understood quickly that education was a big component of what we had to deliver, not to mention the platform itself.

Cathy Conlon:

And then in terms of supporting clients, what we did was we actually pulled people from other parts of the Broadridge business. We're a fairly large company, we're in the S&P 500. So we have a lot of resources we can draw on. We obviously have quite an infrastructure already set up. We just leveraged what we had from across the Broadridge businesses and brought some other associates over to support it. And of course we hired additional people to support this as well. So we used a combination of things to scale the business. Within a matter of weeks, we actually had the whole team and system in place to enable us to scale to 2,000 and we had 2,000 successful virtual meetings on our platform as a result.

Katayun Jaffari:

And I have to say, Cathy, I actually attended some of those education programs. They were ideal. And I do really think it was so important for at least the people who were responsible for making sure that the annual meeting went off without a hitch, that they really did. The Broadridge educational programs really explained everything, set it up so that you knew – from a web portal platform perspective – how the meeting was going to work. So I actually think that was really smart, to think, "Let's make sure people understand the process, not just help them implement it."

Cathy Conlon:

That's great. Thank you.

Katayun Jaffari:

Sure. With that said, how about this year? What are you seeing? I'm sure you've already done numerous virtual annual meetings. You're setting up for those virtual annual meetings. I loved hearing the statistics and the numbers. Can you share some for 2021 that you're aware of?

Cathy Conlon:

It certainly seems like it's going to be another big year this year. We have already seen most of the clients who did it on the platform last year are doing it again. I would say ultimately in the year, we're probably going to end up exceeding the number. Now, I think there's a few factors that will come into play here that companies are faced with.

Cathy Conlon:

Number one, the state requirements. So there are certain states that still are operating under temporary measures to allow virtual meetings. So for some companies, they're playing a bit of a wait and see game. I think they're planning for virtual under the guidance of the temporary measure. If things change because of the vaccine and the numbers change, that could change for some company. So I think we have that. But, I think for the vast majority of companies that are not in those states that have permanent measures, they are planning for a virtual meeting going forward, and we're seeing that planning happening.

Cathy Conlon:

Our expectation is that we will exceed the 2,000. Particularly, you have the companies from January to April where we had a mixed bag. We're seeing them almost all going virtual. So, the numbers are strong. I expect that we're going to see more of the same. I think for companies, it's the only reasonable thing you can plan for in many cases this year. Our expectation is there will be an even higher percentage of companies that will go virtual in 2021 than did in 2020.

Katayun Jaffari:

So, we love this program to be a tip program and I feel like you just teased out an excellent tip for the people listening and watching us—and that is – please make sure you double check your state's requirements for your annual meetings. And I really loved how, Cathy, you shared that we want to make sure what is temporary. We need to keep our eyes on those states that have temporary requirements, and then certainly make sure that you heed the requirements of those that are permanently set. I love that tip. That's our tip: make sure you pay attention to your state requirements for your meetings.

Katayun Jaffari:

I'm also curious, Cathy, as you were talking about last year, how primarily one of the questions was audio or video. And, certainly, people chose audio. Are you seeing any trends this year on companies being interested in trying video?

Cathy Conlon:

No question about it. Absolutely, we're seeing video, but video in a different form. So there are different ways that you can see a video experience, right? It can be very much that full production video where you have a true camera and lighting—and it's a video. Before 2020, that was the traditional video meeting—it was very produced. The new video meeting is this kind of meeting where we're having a very Zoom-like experience where everyone's [the speakers are] on camera.

Cathy Conlon:

Now, what I'm finding is not everyone is good with this for their annual meeting. So some companies are going to have the Zoom-like experience, but others are saying, "A video for my annual meeting should be a produced event and should be a formal event." We have some companies who still intend to do their video meeting in what I would call the traditional way where everyone's in suit and ties and they're having that very produced event.

Cathy Conlon:

Now, the question on that one is – is that going to be okay to create a video, depending on the COVID situation in the state where it's happening? That may be more challenging than not. But video, for sure, there's going to be more of it, but there's going to be more of this type of Zoom-like experience that companies are having in their everyday meetings. So I think we're going to do more of them for virtual meetings. I would also say however, companies are being a little bit cautious because of COVID and so on, but I still think audio meetings are still going to be pretty dominant this year.

Katayun Jaffari:

I will tell you that's what I'm seeing as well. Maybe I want to tease out a little tip out of that. Do you have a recommendation, or at least thoughts, regarding audio only or video? Are you hearing any shareholders or investors complaining about not having video or has audio been perfectly fine?

Cathy Conlon:

Audio has been a perfectly fine medium. I mean, you see it with earnings calls where they are very robust experiences. And if we look at the meetings that happened last year that were audio, companies had more attendance, more engagement, more questions. So it absolutely worked.

Cathy Conlon:

Now, that being said, as we evolve the technology and people get more comfortable with the format, especially this type of format, there's no reason not to think about considering a new format for your meeting. This will bring even bigger benefit to your shareholders, where, as they ask their questions, they can look you in the eye, they can see the response of whoever's answering the question. If you're comfortable bringing your directors in on this format, or even just certain directors in certain management, I certainly think that's something that companies should consider.

Cathy Conlon:

Again, it's obviously specific to the companies, but it's really easy to do, if your backgrounds have been set for the year and this whole experience is getting more common to everybody. So I think that's the future of virtual meetings, regardless. Post COVID, regardless, you're going to see a lot more video interaction, which is so much easier to do now when everyone's more comfortable in it.

Cathy Conlon:

If you look at the best practices around virtual meetings that the industry came together, being able to see people and look them in the eye is a big thing about physical meetings. If we can replicate that in the virtual meeting setting, it makes it easier for companies that want to continue to go forward with the virtual meeting because they're offering that same capability, regardless of whether it's physical or virtual.

Katayun Jaffari:

And I'm going to tease out another tip there because I think that is a great tip, Cathy, something that you said was—these aren't your exact words, but—we need to look at what works best for the company. So at the end of the day, as you are the listener or watching this program, as you are determining how you want to set up your annual meeting, audio, video, think about what works best for you, your group, your management team, and your board of directors.

Katayun Jaffari:

And maybe even challenging ourselves on how we can proceed. Maybe not 2021 in video, but maybe thinking now about 2022 video and if that would work. Because I absolutely agree with you, Cathy, it is easier to set up than it's ever been and there is something to be said to be able to look at somebody when a question is being asked or when information is being delivered.

Katayun Jaffari:

Okay, let's switch gears a little bit. And I want to talk about some of the details of the virtual annual meeting and see if we can provide some more tips to the audience to have one of their most successful annual meetings in the virtual setting. I hate to start with the negative, but I think it's really important that we start with any pitfalls or challenges that you saw either in 2020, or over the past few months regarding the virtual annual meetings and how such pitfalls and challenges can be addressed.

Cathy Conlon:

Sure. Obviously, we saw a lot of success, especially in a short amount of time, but everything can always get better. And I'd say, especially given that we're in audio meetings, having good sound quality is obviously the most important thing. The sound itself, the audio that's coming into the meetings is really important. So making sure that whoever's going to be speaking at your meeting is in a place that is reasonably quiet and they're on a device that they can be heard well through. That's really important. Those sound checks, that testing, has to happen in advance. You have to work with your provider, like Broadridge, to make sure you test all of that because you don't want to just wing that part of it. The audio itself is really important.

Cathy Conlon:

I would say for many companies, shareholder proponents – a lot of companies we had, I think – just under 200 or so meetings that had shareholder proponents or shareholders are generally coming in live to speak their proposals. So you need to make sure that they are enabled to do that however you're going to allow that to happen and making sure that they get tested and are comfortable with the technology. The good news is it seems to be some of the same proponents over and over again so they're getting used to the technology platform. But you're going to want to make sure that's a really seamless experience for them as well, because it's an important part of your meeting.

Cathy Conlon:

And then the last one I would just mention is the Q&A. The Q&A is probably the thing that gets criticized the most with virtual meetings—that companies either didn't address all of the questions or there's this perception of hiding behind the technology. I don't think that's generally true, but there's a perception of it being true. I think from a company perspective, the one thing they can do is talk about how they're going to answer the questions, set the rules for the meeting as it pertains to the questions, and then follow them. Don't leave questions on the table if someone's getting them in – make sure there's enough time before you say, "All right, we're going to have the Q&A at this time." Make sure your shareholders know the rules so they have enough time to put their questions in.

Cathy Conlon:

If you can get the Q&A right... Because the platform is going to work. Our platform, it works, it's experienced, we've done a lot on it. So it's now up to the company to take the tools and make the most of them and the Q&A is the biggest one of all, really, in terms of making sure that you're having the transparency with your shareholders and answer questions.

Katayun Jaffari:

Can we tease out a tip on the Q&A piece? In terms of setting the stage for the Q&A, I think what I'm hearing is maybe during the presentation, as you are setting up the meeting, as you were welcoming individuals to the meeting, I think it's a good idea to set that in the beginning and say, "We will have a Q&A session. We will have the Q&A session at the end of the meeting." Or I know some companies say it'll be at the close of the meeting, after the meeting is officially closed; really just setting expectations. And perhaps saying, "If we do not have time for all of the questions, this is how we will get back to you."

Katayun Jaffari:

Because I also want to make sure that companies realize, I'm glad you gave the example of the investor presentations. You may not have time to answer every question, nor do you have to. But ignoring a question and never getting back to the individual can be very problematic. I think it can be problematic for a company.

Cathy Conlon:

One hundred percent—and whether it's you get back to that individual shareholder or whether, as some companies are doing, is to take all the questions and then posting to Q&A on their website, which I think is a great option – do something. Don't do nothing because I think that's the problem right there.

Katayun Jaffari:

Excellent tip. I love teasing out that tip. If there are questions, think about posting them on the website. Think about ways to address that piece of the conversation. I will ask you, I'm not sure if Broadridge saw this, but I do know or I had heard that in some annual meetings, it was difficult for people to login. I think there're some platforms where you may need two logins. And I think that makes it a little bit more difficult. I believe Broadridge's platform, it's either if you are a shareholder it's one login and if you are a guest you can log in on a separate login. If a company is starting their meeting and they are having this problem, a tip on how to handle it?

Cathy Conlon:

Well, my tip would be use the Broadridge platform because we've made this thing so seamless for shareholders. We manage some of the street holders and if we manage the registered, it actually is a really seamless experience. So all joking aside, I agree, this is a really important point. How do you make a seamless experience for shareholders to get into your meeting? Because it is, after all, there for them. So how to get a seamless experience, we do not require preregistration on our platform. We think that's a way to allow it so that if a shareholder decides that day, they want to show up, they don't have to do anything advanced to enable that.

Cathy Conlon:

I think that's really important, but regardless, guest access. I think you brought up something that I think is important. For any platform, having guest access, I think, is one of the easiest things a company can do to make it accessible. And by the way, most companies in our platform do use it. I would say 80 plus percent at this point are allowing guests in. And for some, they have some concerns about whether they should allow guests. If you do,  make it easy for them to get in, and then they can at least listen in and hear what's going on in your meeting even if they can't ask questions and vote.

Cathy Conlon:

And this is for shareholders, but it's also if your shareholder loses their control number, their access point, they could still get into your meeting and still have most of the capability they would have had. So my recommendation is yes, think about seamless access, but certainly think about guest access in case the shareholder, for whatever reason, doesn't have their control number to get it.

Katayun Jaffari:

Excellent tip. I love that. I did see that a number of people did not... Not all companies provide guest access. So it is something for companies to think about. Excellent. Let's actually turn to, what do you think worked well? Did you have any thoughts about what during the virtual annual meeting worked well? What did you see worked great? Any tips or any things that you saw companies do that would be useful?

Cathy Conlon:

Yeah, so I think one of the things that works really well is if you're having an audio only meeting to make it a little more interesting by putting a video roll in, or even an audio presentation, adding an element to your meeting to make it interesting. It could be a commercial, it could be a slide presentation, but something to add so it's not just the screen itself that you're seeing. I think is a really simple thing that you can do to enable a better meeting experience.

Cathy Conlon:

I think meeting materials, like having links to either interesting presentations that your shareholders can look at or download, is really important. Things like closed captioning, potentially, for shareholders that may need it, that's something you can add.

Cathy Conlon:

Other things, again, if you're having an audio only meeting, putting the images of the presenters on the page so that even if you're having an audio meeting, you know who you're looking at, who you can see. You can customize the page to make it something more interesting for your shareholders to see.

Cathy Conlon:

And one other thing I would just mention is what we call pre-meeting questions – taking questions in advance of the meeting so that if a shareholder can't get to your meeting, they can have an opportunity to submit questions to you. And again, I would recommend doing the Q& A. If you don't address them, post them on your website, is just another option.

Cathy Conlon:

And you know what, I just thought of just one more in terms of the Q& A. Some companies allow shareholders to ask their questions verbally. Instead of just typing the questions in, they were actually able to use a phone line very much like an earnings call and submit their questions. Now I know that that's not for every company, but I think it's a great feature and it does really add a nice interactive element to the meeting itself that I think is really positive. So those are some things I would suggest.

Katayun Jaffari:

Again, teasing out those tips. I don't even need to repeat them all because those are literally one, two, three, four tips on how to make the annual meeting really interesting, really engaging. Love that idea of, I think you called it a commercial, but the couple of minutes on the company, rather than just that one slide that says the company name up on the screen.

Katayun Jaffari:

I also really appreciate the idea regarding the pictures. What I have seen is some companies have their slide up of their agenda, but maybe it can be both the agenda and maybe those who will be speaking and their titles, so that's clear. And again, it just really gives the experience of what an annual meeting can and should feel like – the company really embracing the shareholders and the stakeholders in terms of guests. I know that sometimes that can be, I think, as you mentioned, a little bit nerve wracking, but I do think shareholders and stakeholders appreciate the opportunity knowing that they can engage. And then sometimes even just knowing that they can engage is enough and there may not be anything that they need to engage on because they know they have that access to the company.

Cathy Conlon:

Exactly.

Katayun Jaffari:

So I think, Cathy, maybe this is the time. We've provided a lot. You've provided a lot of tips for a successful virtual annual meeting for 2021. But I think I'd like to end with the following question, do you think virtual annual meetings are here to stay? And if so, what do you think the future looks like?

Cathy Conlon:

I do, I do think they're here to stay. My reason is, number one, because by the end of this year, most companies will have done this twice, right? So it's not like it was a one and done situation. They will have done it twice because that's what we're seeing, a second year. And number two is that they had more engagement. From the numbers that we're seeing, more shareholder engagement, getting more people in, more voting, more questions, the whole thing is proving its value.

Cathy Conlon:

And then the third thing is the technology. Now that there's so many, Broadridge and others, investing in this technology, it'll just keep getting better and better. So the experience will get better. This concern about not having face-to-face interaction or not having that same meet and greet type situation that you have in a physical meeting will go away as you create this great technology platform that is good for shareholders and other stakeholders and good for the company and board.

Cathy Conlon:

So, I do think it's here to stay. Now, will it stay at the same numbers as we're going to see this year? Maybe not, as some companies, the decision what's best for their company is to do a physical meeting for whatever reason. And I think that's perfectly legitimate, but I think what we're going to see is that physical meetings have a lot of limitations of their own as regards to their shareholders and how do you go away from a technology that's proven its value? That's why I think they're going to stay.

Katayun Jaffari:

Excellent. That is an excellent point to end with actually, Cathy, and I think that's absolutely very true. Well, I want to take this time to say thank you, Cathy, for your helpful insights and guidance on how to have a successful virtual annual meeting. And I want to say to the audience, thank you for joining us for this conversation. We hope that you have gotten some tips and some thoughts on how to move forward in 2021 with your virtual annual meeting.

Katayun Jaffari:

If you have any questions, you can always contact me directly at kjaffari@cozen.com. And I am sure I can get you in touch with Cathy. In the meantime, please keep your eyes out for our future programs, including programs on ESG disclosure and governance, as well as reporting and also shareholder engagement. And again, these topics will be brought to you by the experts in the field and brought to you by Cozen O'Connor's Inside Scoop. Have a wonderful day, everyone. Thank you.

 

 


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Katayun Jaffari

Chair, Corporate Governance & Securities

kjaffari@cozen.com

(215) 665-4622


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