Platt Perspective on Business and Technology

Stockholder meetings, annual board meetings and annual meetings best practices 1 – starting a new series

Posted in job search and career development by Timothy Platt on March 1, 2012

This is my first installment in a new series on stockholders meetings, annual board meetings, and on annual meetings in general and for a variety of types of organization – meetings in which senior executive leadership and boards reach out to tell their organization’s story to shareholders and to the outside community, and where certain crucial organizational functions are carried out in front of outside stakeholders. In a real sense this is also a direct continuation of two earlier series:

• Transitioning into Senior Management (see my Guide to Effective Job Search and Career Development postings 158-178) and
• Joining, Serving On and Leading a Board of Directors (see my Guide to Effective Job Search and Career Development – 2 postings 179-205).

The details can and will vary as to how these meetings are held and how publically their proceedings are shared but there are a few fundamental principles as to who attends and how these meetings proceed and I will begin with that. And for the purpose of this first installment, I am going to suggest a relaxed definition of a commonly used term, to simplify discussion. For immediate here and now purposes I will include in the term “shareholder”, holders of common and preferred stock shares tended by publically traded companies – a group always included in this term. I will also include share owners of closed corporations such as housing cooperatives – a type of group generally included but not always considered in discussion of shareholders per se. I will also include members as for example of not for profit cooperatives who have a vested interest in an organization and even a sense of ownership, but who do not explicitly own shares per se of that organization that could be bought and sold. Collectively, think of all of these groups as consisting of individuals and groups of individuals who have a vested interest in the organization itself and who hold a sense of ownership in it, but who are not necessarily part of the organization as employees, executive officers or board members.

• The stockholder and annual board meetings, and general annual meetings I write of here bring the organization’s key senior executives and its board members into the same room with at least a self-selecting group of its shareholders to publically conduct business, and business in which those shareholders at least nominally have a voice too.

I will be discussing what this actually means in practice throughout the balance of this series. But first I want to outline a basic and perhaps cartoon-like model as to what happens in these meetings and in what order. Specific organizations might do things a bit differently than what I will offer here, but my intent is just to include the major pieces, as listed in a common relative order for their being conducted. And I will focus here on annual meetings that include within them shareholder meetings followed by annual board meetings.

• An annual meeting starts with a call to order and with a formal beginning, usually chaired by either the chief executive officer or the board chair – positions that might be held by the same person.
• These meetings often include presentations that might consist of talks from a podium, audio/visual presentations or both. It is common for both the offices of the chief executive officer and the board chair to be represented here, though others might speak and present too.
• For some organizations, this is a time when select committee reports and other information sharing opportunities are included.
• This essentially always, and for incorporated organizations obligatorily always includes an audit report presented by an outside auditing firm as to the organization’s financials.
• This and other reports are generally accompanied by at least brief intervals in which people from the attending audience can ask questions and seek out clarification and where they can share opinion too.
• There are often issues that arise that would need to be voted upon and by the general community of shareholders – and not just the senior executives and/or board members. This can include issues raised and presented by shareholders and if a sufficient set number of votes are represented in a call to include, and timing requirements are met for submitting these items, they would be included on a formal ballot sent out to all shareholders.
• This ballot and this more generally involving voting process would definitely include voting for any board of directors positions that are coming open from end of elected terms, or because a current board member is stepping down or retiring.
• For some organizations this is managed on a one person/one vote basis, though for organizations that are publically traded on the market, vote allocation would more commonly be one vote per share held (for common shares) with perhaps a different vote count per share for certain types of preferred stock. Here I refer, of course just to explicit voting share stock classes as some businesses also offer non-voting shares as well.
• With proxy, mail-in and online voting included, sufficient votes might already have been cast before the actual meeting to determine all voting results and this is in fact common for most organizations.
• An annual board meeting is often held after the stockholder meeting portion of this event in which the board votes to confirm the votes just taken. Technically, a new, incoming board member cannot vote here as their joining the board has not been formally confirmed yet. They would have a formal say in any such decisions and a formal vote in subsequent proceedings in which they were not up for election or reelection.
• At the end of this portion of the annual meeting, any concluding remarks are made from the podium and the meeting itself is adjourned.

Some organizations add steps to this process not included here or split or consolidate steps listed above. Sometimes the order of steps taken varies and certainly within the shareholder meeting’s half of this overall event. But this outline covers most of the basic components and in a working and generally followed order.

But so far I have only really addressed the basic mechanics of these events and not their overarching purpose. And that is where the issues that I would address in this series become important.

• When an organization’s senior executive leadership and board come together to represent the organization in this type of forum they need to do so with a clear and convincing message of transparency and accountability, and one that is as genuine as it is apparent.
• For these meetings to work they have to provide opportunity for feedback that is listened to, and from the floor of the meeting itself and from online and mail-in shareholder participants.
• All such participants should have a genuine voice of a type that requires their having access to sufficient information to make informed choices. Slanted and biased informational resources rob the shareholders of a genuine voice or of opportunity to have one.

I am going to add more to this general discussion in my next series installment, but my focus in that will be in a truly problematical annual meeting that I attended once, held by a major corporation and that for its problems, serves as a teaching case study for now to do this better. You can find this posting and will find others of the series at my Guide to Effective Job Search and Career Development – 2. I have also posted extensively on jobs and careers-related topics in my first Guide directory page on Job Search and Career Development.

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