OT: BIZFEATURE-A new order of business at annual meetings
January 09, 2003 2:02:00 PM ET
By Paul Thomasch
NEW YORK, Jan 9 (Reuters) - The days of corporate annual meetings as upbeat affairs with athletes and movie stars paraded around the room and executives pointing to sky-high stock prices are fading memories.
This year, as both springtime and annual meeting season approaches, shareholders and executives will gather in hotels, convention halls and even high school gyms to meet, greet and exchange pleasantries. Or in some cases, unpleasantries.
"These are serious times for boards and directors," said Ric Marshall, chief executive of The Corporate Library, a specialized investment research company. "Companies are going to be under the microscope from every side."
Even freebies -- and some company literature -- are falling out of fashion with the economic downturn. Last year, EMC Corp. (EMC), a data storage company, decided not to hand out its glossy annual reports at its meeting, choosing instead to give out 16-page pamphlets.
"There is a sense the good times have passed," said Scott Klinger, co-director of corporate accountability at Responsible Wealth, a Boston-based shareholder activist group.
Klinger attends about a half dozen meetings each year and sees investors "beginning to ask a lot more challenging questions" after three years of stock market declines.
Not only did the stock market drop again last year -- the blue-chips lost about 17 percent -- but the public was fed a steady diet of scandals ranging from accounting frauds to conflicts of interest and oversized compensation packages.
Typically, though, the working part of these meetings is dry, parliamentary procedure such as passing resolutions and counting shareholder votes. And the boilerplate corporate update from the chief executive doesn't provide nearly as much excitement as a fiery lecture from the occasional irked shareholder or special interest group.
DO THE TWIST
Among the issues that will be brought up at meetings this year are proposals calling for more analyst independence at Morgan Stanley (MWD), Lehman Brothers Holdings Inc. (LEH) and Goldman Sachs Group Inc. (GS), according to the Investor Responsibility Research Center, based in Washington, D.C.
Religious groups, unions and state pension funds are also calling on companies including Dow Chemical Co. (DOW), Weyerhaeuser Co. (WY) and Bristol-Myers Squibb Co. (BMY) to separate the jobs of chief executive and chairman, said IRRC director of governance research Carol Bowie.
Stock options and compensation are also high on the agenda, Bowie said. She said she "suspects there will be attention paid to these issues" with "boards looking to get back into good graces of the small investor."
Whether that will lead to real reform is another matter, most experts said.
Better times are likely to be had at the annual meeting of Wal-Mart Stores Inc. (WMT), known for attracting many of its most devoted investors and employees. Held in the Bud Walton Arena on the campus of the University of Arkansas, the company's meetings have long been part revival meeting, part pep rally and part Hollywood extravaganza.
How rowdy is the event? The most recent one had supermodel Cindy Crawford lead a cheer spelling out the company's name, which involved a call for bottom shaking and twisting when the cheer arrived at the hyphen in Wal-Mart's name.
While Wal-Mart paid for 3,400 of its workers to fly, drive or catch a bus to the meeting, others are less accommodating.
Farmer Bros. Co. (FARM), an investment company that started out as a food service specialist, held its most recent meeting the day after Christmas.
UNPRECEDENTED SCALE
Other companies have ventured far from their headquarters -- and their shareholders -- for annual meetings.
Take Gap Inc. (GPS), which is based in San Francisco but has held meetings in Albuquerque, New Mexico, and near its distribution centers in Gallatin, Tennessee, and Fishkill, New York.
Qwest Communications International Inc. (Q), based in Denver, held its meeting last year in Dublin, Ohio; Morgan Stanley last year moved its event from the New York City area to London, where a spokesman said it had a "slightly smaller" attendance.
"We wanted to demonstrate we had a global shareholder base and a global employee base," the spokesman said. This year's meeting, however, will be held in the United States.
In some cases, Klinger said, companies have moved meetings to "places that are harder to reach, under the ruse of moving meetings closer to shareholders."
At Tyco International Ltd's (TYC) 2002 meeting, held at the Fairmont Hamilton Princess in Bermuda, only 48 people attended, including its auditors and 11 board members. The meeting lasted 40 minutes.
In spite of a truckload of scandals and the indictment of former Chairman Dennis Kozlowski, Tyco's turnout this year may not be any bigger. But others likely will, experts said.
"Shareholders on every level -- both the big institutions and individual shareholders -- are going to be really watching what's going on this year," Marshall said.
"I think there will be a new level of activism when we actually get to the general meetings, but even just the proxy filings are going to look and feel different this year than they ever have before on a scale that's unheard of," he said. REUTERS
