Going virtual started gaining traction after 2009 when Intel 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 held virtual-only assemblies for the first time.
In the US, about 65 per cent of S&P 500 index companies had hosted virtual meetings or said they would as of May 1, according to Intelligize, a research platform for compliance professionals. Only 11 per cent of them had held their meetings online before and almost all of the companies that went virtual cited COVID-19 as the reason.
Online meetings may allow companies to cherry pick audience questions and executives to give more scripted answers.
Financial technology firm Broadridge Financial Solutions said it has hosted more than 1300 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 per cent of the annual meetings in the US will be virtual, compared to 7 per cent 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 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, 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.