The Zoom Boom is coming to a shareholder meeting near you.
Investors are flocking to virtual shareholder meetings as the coronavirus leads companies to gather online. Amazon.com Inc., for example, drew more than 1,000 participants to its online-only affair in May. Fewer than 150 on average attended in person in previous years, a company spokeswoman said.
The change is shaking up annual meetings at a time when stockholders are demanding more transparency. As issues such as employee diversity take center stage, online gatherings can bolster participation -- providing tech glitches don’t get in the way -- but at the expense of getting to grill management face-to-face.
Increased attendance “may make it easier to get things through that otherwise might get held up,” said David Yermack, a professor at New York University.
Going virtual started gaining traction after 2009 when Intel Corp. held the first online annual meeting, according to a Harvard Law School paper.
With social distancing measures in place this year, companies such as Goldman Sachs Group Inc. held virtual-only assemblies for the first time.
About 65% of S&P 500 index companies had hosted virtual meetings or said they would as of May 1, according to Intelligize Inc., a research platform for compliance professionals. Only 11% of them had held their meetings online before and almost all of the companies that went virtual cited Covid-19 as the reason.
Financial technology firm Broadridge Financial Solutions Inc. said it has hosted more than 1,300 online shareholder meetings this year through mid-June. That’s more than six times the number held in the year-earlier period.
Yermack and Lily Li, an assistant professor at Temple University, estimate that this year 70% of the annual meetings in the U.S. will be virtual, compared to 7% in 2019.
Shareholder advocates say technical snafus and the lack of in-person engagement with executives pose challenges. Online meetings may allow companies to cherry pick audience questions and executives to give more scripted answers.
“If you’re in a room with people, you can sort of see what’s going on, and if there’s a shareholder who wants to ask a question and is not being called on, it’s sort of obvious,” said Ken Bertsch, a special adviser at the Council of Institutional Investors. “But you can’t tell that in a virtual meeting.”
In some cases, investors who sought to attend virtually encountered difficulty proving they were shareholders, according to CII.
Going virtual may be short lived. Home Depot Inc. and ConocoPhillips, which held their annual meetings online this year, have said they expect to revert in 2021.
Yet hold-outs remain. Among them: Tesla Inc., which plans to have its annual meeting in September at its factory in Fremont, California, provided health guidelines allow. In a nod to tech, Tesla will webcast the event.
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