Shareholders are assuming a more active voice in the boardroom. Many proxy statements include shareholder proposals that showcase this interest. We have seen proposals for greater activism in such areas as director voting policies, director nomination, compensation, and company policies on sustainability.
With regard to direct communication between shareholders and the board of directors and responses to shareholder concerns, public companies are now expected to have communication procedures that are consistent, clear, and candid and allow for a two-way dialogue. More companies are including policies for shareholder communication on their websites and providing mechanisms for communication through portals, e-mail, interactive webcasts, and the annual meeting.
Boards should coordinate any shareholder communications with management, and most directors prefer for management alone to speak for the company. When communicating with shareholders, boards should consult with counsel to determine that all communications are made within the scope of Regulation Fair Disclosure (Reg. FD). Reg. FD promotes fair and full disclosure and bans disclosure of material, nonpublic information to a select group of individuals or entities.
"Boards and investors have often struggled with how to best communicate on corporate governance topics. Many boards are reluctant to engage the company’s shareowners until forced by an acute event or extreme shareowner pressure. Others employ practical methods to communicate beyond the annual general meeting. I continue to urge boards to be proactive in their outreach; much can be gained by taking the time to understand the company’s shareowner base and their hot-button issues."
Steve Alogna, director , Deloitte LLP
The Annual Shareholder Meeting
At least once a year U.S. public companies hold an annual general meeting, which provides a forum for shareholders and management to have a dialogue on various company matters and to hold annual director elections.
These guidebooks offer an overview of some of the laws, regulations and listing standards relevant to such meetings.
- 2013 Annual Meeting Handbook: Providing a General Overview of State and Federal Laws and Stock Exchange Rules Relating to Annual Meetings of Shareholders Posted with permission from RR Donnelley, copyright 2013.
- Annual Meeting Handbook, 2013 Edition
Posted with permission from Latham & Watkins LLP., copyright 2013.