May 7, 2020
Authored by: Vicki Westerhaus, LaDawn Naegle and R. Randall Wang
Because of the rapid shift from in-person to virtual annual meetings mandated by COVID-19 health and safety concerns, many companies held first-time virtual-only meetings, with both management and shareholders exploring the process in real time. Not surprising, reports of virtual meeting glitches soon began to emerge.
Twenty minutes into the virtual-only annual meeting of Goodyear Tire & Rubber Company, shareholder John Chevedden was presenting his shareholder proposal (to allow shareholders to vote on bylaw and charter amendments) when the microphone cut out. Chevedden filed a shareholder alert with the SEC requesting that the polls be reopened so Goodyear shareholders can vote based on the full text of his proposal presentation. So far, no word from Goodyear on Chevedden’s allegation that management cut off the microphone.
Earlier this week, the Council of Institutional Investors (CII) sent to a letter to the SEC Investor Advisory Committee expressing concern about some virtual-only annual meetings early in the 2020 proxy season, citing anecdotal reports of problems including:
- Shareholders struggling to log into meetings, in part due to control number snafus;
- Inability to ask questions in some cases if the shareholder voted in advance by proxy;
- Shareholders unable to ask questions during the meeting;
- Possible cherry-picking of questions asked by shareholders and lack of transparency on questions asked by shareholders; and
- Confusion on channels for shareholder participation, with shareholder proposal proponents required to use a different line than that used for general shareholders.
The CII urged public companies to mitigate the