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New technologies for new engagement: benefits on offer are greater opportunities for shareholders to participate in the annual meeting, higher levels of voting participation, more transparency, and lower costs.

ANNUAL SHAREHOLDER MEETINGS are changing for the better, and when it comes to technology and progress it's safe to say there's no going back.

Vast shifts in technology--including online forums, social media, sentiment gathering, and other developments--are enabling annual shareholder meetings to evolve with a rapidly changing world. Certain technologies are creating opportunities for directors to more regularly, efficiently, and broadly understand the views of all of their shareholders, and are affording shareholders levels of transparency, participation, and privacy not previously seen. These technologies can create efficient outreach throughout the year, as well as annually at shareholder meetings and, ultimately, we believe, contribute to improved levels of knowledge and, therefore, trust in equity markets.

If asked to imagine a shareholder meeting, some people might paint a heartland scene--a sports arena filled to the brim with adoring shareholders sipping cherry sodas. Others might describe a more dramatic scene: an issues group hijacks the Q&A session and security guards spring to attention. The reality, of course, for the vast majority of annual meetings is far different.


Most meetings are sparsely attended. Shareholders would like to be more involved but attending in person can be time-consuming, expensive, and inconvenient. As a result, many companies hold their annual meetings in a small conference room and provide only such bare essentials as coffee, donuts and copies of the proxy statement and annual financial statement for the few shareholders who are able to attend in person. Yet, a company's preparations for the meeting, including board travel, security and other arrangements, can be costly and time-consuming whether one or more people attend.

Game-changing technology

Internet webcasts of meetings are, of course, not new, but until recently there was no easy way to assure that questions submitted by participants or votes cast online in real time were, in fact, from actual, validated shareholders of the company. In 2009, Broadridge Financial Solutions unveiled technologies for "Virtual Shareholder Meetings" and "Electronic Shareholder Forums." Although relatively new, these technologies are changing meetings for the better. Among other benefits are greater opportunities for shareholders to participate and lower costs to companies, shareholders and boards. Early results show increases in engagement and information flow.

The Virtual Shareholder Meeting technology provides a means to hold meetings online, with real time voting--either on a "virtual-only" basis, if preferred, or in conjunction with a physical meeting. Busy shareholders can attend more meetings, more conveniently, without the costs in time and out-of-pockets associated with traveling to a distant meeting location.

The Electronic Shareholder Forum technology enables boards and management to interact with validated shareholders at any time of the year, including in advance of an annual meeting. It offers an efficient means for management and directors to understand the views and perspectives of their broad population of shareholders and, among other benefits, it provides shareholders with another means to ask questions of directors or management, take surveys (whose results can be tabulated by share amount), and access company information. This makes broader information more readily and more cost-effectively available to boards, management, and shareholders and enhances the overall communications process throughout the year.

Shareholder verification

These technology solutions differ from typical Internet forums and webcasts in several important ways. That is, while they offer Internet convenience and anonymity they also validate shareholders as actual shareholders, including verification of their share ownership level in a participating company. This enables management, boards, and shareholders to know that the participants are actual shareholders of a company rather than Internet interlocutors or gadflies with no financial stake.

Moreover, because the technologies can be provided through a shareholder's brokerage firm or custodian bank the notification is direct, and users benefit from rigorous controls and information security. With connections through a brokerage account, participants are not asked to disclose personal information such as their name, address, and share amount in order to participate--yet linkage to a brokerage account can offer greater levels of decorum and seriousness for all participants.

These technologies offer specific benefits for directors. New lines of communication to both retail and institutional shareholders can provide boards with broader and more complete shareholder perspectives on how their company is performing. Directors are afforded a means to distinguish shareholder views on key topics from populist opinions.

Results are promising. For our company, the increase in participation was significant. In 2008, we had a traditional annual meeting; that is, it was held in a physical location in a major city. (This was our first full year operating as a public company.) Fewer than 10 shareholders attended, only three asked questions, and none of the attendees voted. In the following year, as a result of providing a fully virtual shareholder meeting, along with an electronic shareholder forum in advance of the meeting, over 180 shareholders attended the meeting, 15 asked questions either before or during the meeting, and 22 voted their shares online in real time at the meeting. In 2010, we had similar levels of participation and engagement thanks to these new technologies.

The experience is not unique to Broadridge and its meetings. To date, over 30 companies have held virtual shareholder meetings, each offering real-time voting online. Ten firms have also held electronic forums in conjunction with their virtual meetings. These numbers include large and small companies from a variety of industries, both domestic and offshore--some had meetings in which there was significant shareholder interest.

Facilitating flows of information

New regulations, such as say on pay, are causing some companies to seek new lines of engagement with their shareholders. Other companies are seeking new lines of engagement simply because it makes good governance sense. Such firms are committed to enhancing their channels of communication by applying new technologies to better facilitate timely and efficient flows of information, both around and during annual meetings.

Shareholders, as well as companies, are benefiting from efficiencies and conveniences and new avenues of engagement that are more in tune with a changing world. New technologies enable you to know what a high school classmate (who you probably don't remember) has done over the past 30 years (including during the last 30 seconds). It comes as no surprise, therefore, that new technologies for companies, directors, and shareholders can lead to greater knowledge transfer, higher levels of voting participation, and more transparency.

The author can be contacted at

Richard J. Daly is chief executive officer of Broadridge Financial Solutions Inc., a leading provider of technology solutions for shareholder communications and proxy voting. Broadridge was spun off as a publicly traded company from Automatic Data Processing Inc. in 2007. Daly, who joined ADP in 1989, was president of ADP's Brokerage Services Group prior to his current role.

RELATED ARTICLE: The opportunity is right now to revitalize the annual meeting

View from The Shareholder Forum on the acceptability of electronic participation. BY GARY LUTIN

When controversies developed last year about whether "virtual" annual meetings would be acceptable to investors, leaders of the three constituencies--Intel Corp., a company respected for both its governance and investor relations that wanted to use the new communication technologies for its annual meeting; Walden Asset Management, an activist investment fund that had vocalized concerns about depriving shareholders of their rights to confront a company's management; and Broadridge Financial Solutions, a service provider that was offering support for "virtual" meetings--asked the Shareholder Forum to moderate an open marketplace definition of standards for the fair and orderly conduct of shareholder meetings that allow electronic participation.

Guided by a panel of corporate and investor influence leaders and advised by invited experts, the Forum's "E-Meetings" program defined relevant issues in exchanges of views among participants representing the full range of decision-maker perspectives. Evolving proposals of standards were presented for discussion at an open meeting in July 2010 that was itself a test of "virtual" communication processes, with about 30 participants convening physically in New York and an equal number joining by webcast. (All of the program reports are available at www. What we learned should not be surprising:

* First, everyone, on all sides, likes direct communication and wants more of it. Most investors want to get decision-making information from a company's managers, and most company managers want to find out what will influence their investors' decisions and then respond to those interests. Notably, our surveys of professional investors showed consistently strong preferences for management sources of information compared with proxy advisors. This means that you can expect most investors to welcome a company's taking active control of communications to determine investor interests and define the issues that need to be considered.

* The advantages of applying current technologies to shareholder communications are significant. Inspired by Broadridge's pioneering "virtual" meeting services, Forum participants organized projects to develop a broader set of electronic processes for shareholder verification and related "Forum Tools" that can be made available independently to companies through any qualified transfer agent. You now have an open market choice of service providers for the communication tools you need to compete for investor support.

* Finally, the program's original issue of fairness in shareholder communications was viewed ultimately as a relatively simple matter. With a clear consensus of corporate and investor participants, the Forum published three simple questions for considering whether investors are provided reasonable opportunities to ask questions, know what others are asking, and observe management's responses. Most Forum participants also supported a respectful tolerance of pioneering experiments to develop improved communications. If you want to be sure of the acceptability of a new process, though, you can expect genuinely helpful responses from asking some representative investors how they think it can be done right.

We have an opportunity now to revitalize the annual meeting's function with more practical exchanges of information. A company's directors, with their diverse experience in the basic business practices of determining and responding to customer decision-making criteria, can apply that wisdom to guide the development of similar processes for winning the votes--and the capital--of investors. This competition for investor support is just as important to corporate success as the competition for customer support. And effective communication is essential to both.

Gary Lutin has chaired the open Shareholder Forum programs since they were initiated by the New York Society of Security Analysts in 1999, and organized The Shareholder Forum Inc. to manage the programs and make its "Forum Tools" openly available to qualified transfer agent members of the Securities Transfer Association for their support of corporate communications with investors. (Ed. Note: Broadridge Financial Solutions independently offers "Electronic Shareholder Forum" services to its corporate clients as discussed in the accompanying main article.)
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Title Annotation:ANNUAL MEETINGS
Author:Daly, Richard J.
Publication:Directors & Boards
Date:Jan 1, 2011
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