Annual Shareholder Meetings Get Mixed Reviews From Investment Pros; Size of Investment, Opportunity to Interface with Management, Poor Company Performance Motivate Attendance.

Business Editors

CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--April 17, 2000

Do annual shareholder meetings provide value to investment professionals?

Yes. And no.

When the Association for Investment Management and Research put the question to a sampling of its members just before the start of the 2000 "annual meeting season" this spring, the 196 investment professionals who responded to AIMR's e-mail survey split their answers three ways: 39% yes, 35% no and 26% undecided.

In fact, with so many demands on their time, 56% said they do not attend annual shareholder meetings at all, while 29% said they attend the meetings of less than a tenth of the companies they follow. (On average, analysts each track 51 public companies, while portfolio managers each follow 89.)

And with voluminous data from a vast array of sources vying for their attention, very few investment professionals consider annual meetings to be a critical information resource. Still, 74% of respondents said they would be more likely to participate in annual shareholder meetings if they were available via Web cast.

What are the most important considerations in deciding whether to attend?

The size of investment in the company is by far the No. 1 factor: 72% said it's a primary consideration. Next is the opportunity to interact with management (a primary consideration of 47% of respondents) and to listen to management's presentations (44% said it's a primary factor).

If the company has under-performed recently, the analysts and fund managers said they would be much more likely to attend: 44% said poor performance would be a main reason they would consider attending, versus only 9% who said favorable performance recently would be a prime motivator.

What areas don't factor in to the decision at all? Interacting with shareholders (62% said that's not a key factor), recent favorable performance (58% said it wouldn't be a consideration) and the opportunity to vote on controversial issues (36% said that's not of prime importance).

Many AIMR members commented that they simply don't expect to learn anything at an annual meeting that hasn't already been disclosed elsewhere, so it's not an efficient use of time.

Others saw value in the less tangible benefits of attendance - for example, evaluating management's performance in a public and sometimes hostile setting, or getting a sense for others' confidence in management. Hearing others' concerns and questions in an open forum can also be helpful, some AIMR members said.

Best and Worst Meetings

When asked to describe the best annual meetings they had attended, most respondents mentioned openness and candor on the part of management, with less "spin" and more frankness, especially in discussing tough issues and challenges facing the company and its industry. AIMR members said they preferred shorter presentations with more time for unscripted Q&A and other interaction with attendees.

The worst meetings, respondents said, were overly staged and scripted, with lengthy presentations, too many presenters and not enough time for questions. One respondent called these "boiler plate meetings that just restate the information that's already in the annual report." Others complained about individual shareholders with axes to grind being allowed to take time away from broader, more important issues that impact investment decision-making.

State laws and stock exchanges require publicly held companies to hold annual shareholder meetings to elect board members and transact other business.

The Association for Investment Management and Research is an association of 41,000 financial analysts, portfolio managers and other investment professionals in 95 countries. Its membership also includes 94 local societies and chapters in 21 countries. Headquartered in Charlottesville, Va., AIMR has a staffed office in Hong Kong and is preparing to open an office in Europe. The association is best known for it Chartered Financial Analyst (CFA(R)) professional-credential program, which today has more than 73,000 candidates enrolled from 135 nations. AIMR also is renowned for its stringent professional conduct standards and for its industry-leading advocacy and standard-setting work encouraging full and fair disclosure of financial information for investors and anyone involved in investment decision-making. More information on AIMR is available by calling 800-247-8132 or 804-951-5499 or visiting www.aimr.org.

Here is how security analysts, portfolio managers and other investment professionals who are members of AIMR answered the question, "What would be your most important considerations in deciding whether to attend an annual shareholder meeting?" (196 respondents).

                           Primary         Secondary       Not a
                         consideration   consideration   consideration
----------------------- --------------- --------------- --------------
1.  Size of investment        72 %            14 %            14%
----------------------- --------------- --------------- --------------
2.  Interact with
     management               47 %            31 %            22 %
----------------------- --------------- --------------- --------------
3.  Listen to
     management
     presentation             44 %            37 %            19 %
----------------------- --------------- --------------- --------------
4.  Recent unfavorable
     performance              44 %            29 %            27 %
----------------------- --------------- --------------- --------------
5.  Vote on controversial
     issues                   38 %            26 %            36 %
----------------------- --------------- --------------- --------------
6.  Geographic proximity      35 %            41 %            24 %
----------------------- --------------- --------------- --------------
7.  Q&A                       32 %            38 %            29 %
----------------------- --------------- --------------- --------------
8.  Possible material
     disclosure/
      surprise                30 %            41 %            29 %
----------------------- --------------- --------------- --------------
9.  Interact with
     shareholders             11 %            27 %            62 %
----------------------- --------------- --------------- --------------
10. Recent favorable
     performance               9 %             33 %            58 %
----------------------- --------------- --------------- --------------