Annual Meetings Can Be Valuable Tools for Journalists

Are annual shareholder meetings passé?

The Conference Board thinks they might be, concluding in a recent report that they've become a waste of time for institutional investors and an annoyance for the companies themselves. Meaningful issues are decided well in advance, the nonprofit group of business leaders notes, and many meetings are dominated by activists and nuisances.

True enough. Anyone who's covered a few knows annual meetings can be exercises in exasperation. Their pro forma agendas are often only interrupted by shareholders' soliloquies and disjointed questioning.

But that's exactly why the meetings are valuable for business journalists. In an era in which most corporations have become a little too good at controlling the flow of information, a little too polished with their image, the annual meeting is the great leveler -- a place where CEOs have to face the consequences for their actions in the most public way possible, face to face with the owners of the company.

St. Petersburg Times business columnist Robert Trigaux attended three years ago when legendary shareholder activist Evelyn Y. Davis showed up at J.P. Morgan Chase's meeting in Tampa.

The colorful Davis -- the owner of 1,000 shares of Morgan Chase -- wasted no time in firing a volley of rough questions at CEO William B. Harrison Jr.

•  Why did the bank make an unsecured loan of $500 million to Enron?

•  Why was a Morgan Chase executive on the board of Global Crossing?

•  How was the bank protecting data from hackers?

•  How much did the meeting's security cost?

Through it all, Trigaux wrote, Harrison's body language betrayed his tension at having to endure such grilling. Then he answered the questions.

Not every annual meeting has such potential. CEOs of low-profile companies may get nothing more than a few questions about pensions or customer service from a mostly empty room.

When Scott Leith covered office-furniture manufacturers for the Grand Rapids Press in Michigan, their meetings "would have really no news coming out of them," he says. But now that Leith covers the beverage industry for The Atlanta Journal-Constitution, the gatherings can get much livelier.

Coca-Cola, for instance, "is one of a handful of companies that are a major target for activists," Leith says. "When I go to the Coke meeting, it's almost always a little bit of theater, probably more so than any other company I cover." The last three meetings, he adds, "have had fairly intriguing story lines to them. Last year, a protestor was dragged out."

The same is true of another Atlanta company, Delta Air Lines, which has wrangled with its unions over pay cuts and concessions that Delta says were needed to avoid bankruptcy. Delta's meetings, Leith says, provide an opportunity to view the interaction between the airline's management and its employees -- a sort of public temperature-taking that can help reporters flesh out the bigger story.

In some cases, the annual meeting gives reporters and shareholders a rare chance to see management up close and personal. "As a Microsoft shareholder, the annual meeting is your only shot at seeing Bill Gates and Steve Ballmer in action," says Becky Bisbee, business editor of The Seattle Times. "A public meeting is also a good way for a reporter to get a sense of the shareholders -- what are their questions, concerns?"

The style of the meeting can be revealing, too. Starbucks, for instance, "makes their shareholders' meeting a lot of fun," Bisbee says. "They have so many people who want to come that you need a ticket to get in. When the day comes that the meeting is a non-event, it will be very telling."

When an event is fun -- or colorful or contentious -- it lends itself to the kind of narrative treatment that draws readers in. That was the case with Starbucks' meeting this year, which Seattle Times reporter Monica Soto Ouchi described in her lede this way:

The only thing missing was Oprah.

There was the couch. The touching stories. The grown men shifting in their seats, blinking back tears.

But yesterday was about another O — Orin Smith. The legendary Starbucks chief executive will retire in March, but not (shareholders learned) without a proper sendoff.

Starbucks yesterday produced a three-hankie tribute to him at its annual shareholders meeting at Marion Oliver McCaw Hall.

More than 5,200 shareholders attended the event; the company added an overflow room after some complained that seating was full. (Starbucks has gained standing for putting on one of the better meetings on Wall Street.)

"It's theater with coffee," said one woman after the meeting, clutching her purse outside the hall.

Not every company is Starbucks, of course, and not every meeting is worth covering. Trigaux of the St. Petersburg Times thinks reporters should attend the meetings of any substantial company that the newspaper tries to cover well, including the company "that is otherwise unwilling to show itself to the media." He advises taking a pass " if the company holds generic meetings that nobody attends and the journalist has good access otherwise," or if the meeting is distant and possibly not worth the trip.

If the decision is to cover, Trigaux, a business reporter for nearly 30 years, offers some advice for getting the most news value out of what may be a staged event.

Before the meeting:

•  Do your homework. Be well versed in the company's proxy statement and anything it reveals about the board -- who sits on it, who's coming and who's going -- and the directors' compensation.

•  Read it, too, for information on the year-to-year changes in compensation of top executives, as well as for revelations about any conflicted financial relationships between "independent" directors and the company.

•  Read the proxy closely for any shareholder resolutions, and always contact and interview the shareholder whose resolution appears in a proxy before the actual annual meeting, provided the resolution is relevant.

At the meeting:

•  Be aware that it's a staged event, and let your readers know that if necessary. "Almost any contact with a company these days seems staged in one way or another," Trigaux says. "I often find value in attending annual meetings. Some companies are surprisingly free-wheeling at annual meetings, which can help reveal corporate culture." At other meetings, he's witnessed protests "and shareholders so upset that the meeting has gone on for hours."

•  Even the most staged events can be interesting, Trigaux says. "Many annual meetings I have been to have had a very imperial atmosphere," he notes. "I have also been at many annual meetings in which a troubled company nervously faces a room of shareholders and nobody speaks up. Amazing."