Further to our several reports about coronavirus-triggered virtual shareholder meetings in yesterday's weekly Society Alert, based on its discussions with ISS and Glass Lewis over the past 24 hours, Kingsdale Advisors reported on how each of them will approach coronavirus-prompted virtual-only shareholder meetings in the context of their typically unfavorable or suspect view of meetings that don't offer an in-person component:
ISS: While virtual-only meetings have not been well-received by ISS’s institutional clients in the past, the proxy advisor expects its clients to be more accommodating in 2020, given the extremely exceptional and extra-ordinary environment caused by the COVID-19/coronavirus outbreak. ISS, however, will require the issuer to provide full disclosure ensuring that the meeting will not limit shareholders’ rights to participate. Specifically, ISS will expect virtual meetings to be transparent and include two-way communication, allowing shareholders to ask questions, be critical of a company’s performance or governance, and present shareholder proposals. How companies manage their meetings this year, will likely impact ISS’s view of virtual meetings going forward.
Glass Lewis: For virtual-only meetings, Glass Lewis will scrutinize an issuer’s proxy material disclosure about the logistics of accessing a meeting and a shareholder's ability to ask questions. For companies who have already filed their proxy materials but are now switching to a virtual-only meeting, Glass Lewis will look for public disclosure for why the meeting is now virtual. Specifically, Glass Lewis expects companies to: state that the change is due to the COVID-19/coronavirus outbreak; provide information about accessing the meeting; and confirm that shareholders will be able to ask questions at the meeting. As an example of sufficient disclosure, issuers can check the DEFA14-A that Starbucks filed on March 4, 2020 when opting for a virtual-only meeting just two weeks before their meeting date.
As previously reported, Glass Lewis' Proxy Paper Guidelines provide that it will generally recommend voting against members of the Governance Committee where the board is planning to hold a virtual-only shareholder meeting and the company does not provide robust disclosure in the proxy statement that assures shareholders that they will be afforded the same rights and opportunities to participate as they would at an in-person meeting. As for ISS's view, see "ISS Offers 2019 Overview of Virtual Shareholder Meetings in the U.S." (CLS Blue Sky Blog).
Access numerous memos on coronavirus impacts on shareholder meetings, including virtual-only considerations, on our Annual Meeting page here and on our Virtual Meetings page. Access resources on coronavirus-related risks and risk mitigation here, and financial reporting implications here. Proxy Advisor policies are here.