Institutional Investor Group Warns Virtual-Only Meetings Threaten Shareholder Democracy

A group of institutional investors is expressing concerns about the increase in virtual-only shareholder meetings that they believe may undermine shareholder democracy.

In a public letter released on April 18, a coalition of 38 investors led by the B.C. General Employees’ Union urged S&P/TSX 60 companies to disclose how they will protect shareholders’ legal rights.

“The core of shareholder democracy relies on the robust exchange of viewpoints and the responsible exercise of shareholder rights,” stated Paul Finch, CFO of BCGEU.

While acknowledging the potential of technology to enhance shareholder democracy, Finch worries that some issuers are utilizing virtual meetings in ways that compromise these rights.

Key issues highlighted include limited shareholder engagement, complex registration processes discouraging participation, and lack of transparency in addressing questions submitted.

“As guardians of significant assets, it is our collective responsibility to ensure that technology acts as an enabler rather than a barrier to shareholder democracy,” Finch added.

The letter signatories, with assets totaling over $1.7 trillion, include California State Teachers’ Retirement System, Desjardins Global Asset Management, and the Church of England Pension Board.

Highlighting that 57% of S&P/TSX 60 issuers held virtual-only AGMs last year, the coalition emphasized the importance of safeguarding shareholders’ rights to active participation in meetings.

“Transparency and inclusivity in virtual settings are critical to preserve the value of these annual meetings,” said Oumayma Ouzane, senior advisor at Desjardins.

Despite the trend towards virtual meetings, some companies are committed to incorporating an in-person element in their meetings.

For instance, TD Bank Group, which recently held its AGM, stated its commitment to not going fully virtual. Board chair Alan MacGibbon expressed the value of meeting shareholders face-to-face.

However, even companies opting for a hybrid approach are facing challenges in navigating the virtual aspect effectively.

During TD’s meeting, a shareholder raised concerns about the online question process, prompting CEO Bharat Masrani to acknowledge the need for improvement.

“We should address that issue. Our technology head is here, taking your feedback seriously,” Masrani assured.