The option to hold a solely virtual annual meeting has been with us for several years now, but we certainly will see a dramatic increase in the number of companies using these purely online events this coming proxy season. Broadridge’s virtualshareholdermeeting.com platform lists 140 virtual or “hybrid” (offering a virtual option to supplement the in-person meeting) events on its platform alone from now through the end of May. And we’ll be sure to see more of these events in the coming weeks as a result of the SEC’s new annual meeting guidance due to COVID-19 travel and gathering restrictions.
Below we have shared the SEC’s guidance around three major areas relating to annual meetings, including 1) changing the date, time and location of meetings; 2) holding virtual or hybrid annual meetings; and 3) providing flexibility regarding shareholder proposals. We have also included links to helpful resources, and proxy and news release examples relating to virtual or hybrid annual meetings. Of course, since state law governs the conduct of annual meetings, please refer to those corporate codes as well as any limitations provided by your stock exchange.
SEC Guidance
1. Changing Date, Time or Location of In-Person Meetings.
If you have already mailed and filed your proxy materials:
Issuers may change the date, time or location of annual meetings without mailing additional soliciting materials or amending proxy materials if they:
- Issue a press release announcing the change;
- File the announcement as definitive additional soliciting material on EDGAR; and
- Take all reasonable steps necessary to inform other intermediaries in the proxy process (such as any proxy service provider) and other relevant market participants (such as the appropriate national securities exchanges) of such change.
If you have NOT already mailed and filed your proxy materials:
The SEC advises that issuers consider whether to include disclosures regarding the possibility that the date, time or location of the annual meeting will change due to COVID-19, and that determination should be made based on the particular facts and circumstances and the reasonable likelihood of such a change.
2. Holding Virtual or Hybrid Shareholder Meetings.
If you have already mailed and filed your proxy materials:
Issuers that have already filed and mailed their definitive proxy materials do not need to mail additional soliciting materials (including new proxy cards) to switch to a “virtual” (completely online) or “hybrid” meeting if they take the same steps as with the change of the date, time or location of the meeting described above.
If you have NOT already mailed and filed proxy materials:
The SEC expects issuers to notify its shareholders, intermediaries in the proxy process, and other market participants of plans to hold a virtual or hybrid meeting in a timely manner and disclose clear directions as to the logistical details, including how shareholders can remotely access, participate in, and vote at such meeting. These disclosures should be in the definitive proxy statement and other soliciting materials.
3. Flexibility Regarding Shareholder Proposals
The SEC staff is encouraging issuers, to the extent allowable under state law, to provide shareholders who have proposals on the proxy, to present those proposals by alternative means at annual meetings during the 2020 proxy season. This includes the ability to present those proposals by phone.
The SEC staff also will consider the inability to travel or other hardships related to COVID-19 as “good cause” for shareholders not to be able to present their proposals at annual meetings. Issuers that would normally have had cause under rule Rule 14a-8(h)(3) to exclude those proposals for two calendar years because the supporting shareholders had not presented the proposals in person, will now not have cause to do so.
Resources
- Virtual Annual Meeting Services
- Broadridge Virtual Shareholder Meeting
- Alliance Advisors Virtual Meeting Services
- IssuerDirect Annual Shareholder Meeting
Corporate Examples
- Completely virtual annual meetings
- Tennant Corporation Proxy
- Hewlett Packard Enterprise Annual Meeting Website
Change from in-person to virtual meeting
- Starbucks: News Release Announcing Change & Additional Proxy
- FMC Corporation: News Release Announcing Change & Additional Proxy
In-person meeting, but Proxy includes potential to change to virtual
- Wells Fargo: Additional Proxy
Last minute switch from in-person to virtual
- Agilent Technologies: Additional Proxy & News Release
With annual meetings and all stakeholder communications, companies need to be thoughtful and strategic in how they navigate this unprecedented global health crisis. Your employees, investors, customers and partners will appreciate and remember your company’s transparency, consistency and the humanity by which you approach this situation. If you need help navigating this complex time, Sharon Merrill is here to help. We have been advising clients on investor relations and crisis communications for decades. Please reach out to set up a strategy call with our senior-level team to address your questions and discuss ways that Sharon Merrill can support your strategy and communications in response to COVID-19.
This blog is intended for informational purposes only and not as legal advice. Please consult legal counsel before developing a plan for your company’s proxy and annual meeting.
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