Although technological advancements may allow companies to hold virtual annual meetings, both investors and executives can benefit from convening in person.
In recent years, the trend has been towards sharply declining public attendance at corporate annual meetings. Some companies have even toyed with the idea of cancelling the in-person meeting altogether and instead hosting “virtual” meetings via the Internet. Indeed, some of these online forums are highly acclaimed and well attended. Once the bastion of shareholder activism and the main opportunity for investors to interact with the board, have annual meetings become irrelevant in an age of instant information delivery? Most Fortune 500 companies get fewer than a couple hundred people through the doors.
In a stunning reflection of its CEO’s famed contrarian investment style, Berkshire Hathaway defies this trend. As you will read in Directorship’s June/July cover story, Berkshire’s recent annual meeting attracted some 40,000 people, who gathered to listen, learn, question and be entertained by Berkshire’s Charles Munger and Warren Buffett. The fact that so many people attend the event is as much an indication of how the company views its shareholders, as it is the way investors and the public view Berkshire and its iconic leader.
While we are not suggesting that filling a stadium with shareholders is the only way to go about producing an annual meeting— it is expensive and time consuming and the only other company that comes close is Walmart, which each June attracts approximately 27,000 shareholders to its meeting—there are lessons that other corporate directors and CEOs can glean from the Berkshire example. Investors appreciate the accessibility and opportunity to meet the company leadership and for their part, the leaders seem to enjoy it too. As with everything related to corporate governance, it’s a two-way street.
One inevitable question that comes about when discussing Berkshire is how long Buffett it likely to stay at the helm. CEO succession is an issue that vexes many boards. There are several emerging best practices in the area that you can read about in my Boardroom Guide to CEO Succession. It is becoming clear that effective talent management, not just with the CEO but all executive leaders, is among the most important things a director must do, and many are not well equipped. That is until now.
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