September 24, 2010 / 6:52 PM / 9 years ago

Analysis: Shareholder meetings via Web mute dissident voices

BOSTON (Reuters) - It was at a fictional shareholder meeting that Gordon Gekko famously declared that “Greed, for lack of a better word, is good,” in the original 1987 film “Wall Street.”

Soon movies might be the only place to hear pointed outbursts from investors. This year more than a dozen companies moved their annual meeting to online-only settings where they can rephrase or ignore contrarians.

Critics say that is what happened at Symantec Corp (SYMC.O), which on Monday became the largest company so far to skip the “live” portion of its annual shareholder confab.

Symantec says it was only trying to be more transparent and provide more access to management. The maker of Norton antivirus software faces discontent over its stagnant share price and trouble capitalizing on acquisitions.

But many investors say the meeting’s arrangement shielded leaders from tough questions, and marked a potentially seismic change for the key ritual of corporate governance.

Bruce Herbert, chief executive of Newground Social Investment, a small Seattle firm that manages less than $100 million, said Symantec seemed to ignore critical questions focused on the event’s format that he and a colleague typed into the online session, and ended the event prematurely.

“They said there weren’t any more questions, and meanwhile we were getting hoarse yelling at the monitor,” Herbert said. Newground Vice President Larry Dohrs said a challenge he typed to Symantec Chairman John Thompson was paraphrased by the company to sound “soft and puffy” during the event.

Steve Schueth, president of First Affirmative Financial Network, a Colorado registered investment advisor, had urged Symantec beforehand to hold the virtual meeting alongside a traditional live one, a model lately used by companies including Dell Inc DELL.O and Intel Corp (INTC.O).

“Holding a hybrid meeting will avoid the perception of embattled Symantec executives hiding behind technology,” he wrote the company just before the meeting was held. He got back a letter that did not directly address the objection. “They basically said, ‘We’re going to do what we want to do,’” Schueth said.


Symantec Vice President Genevieve Haldeman said the company decided to hold its meeting online this year after scanty attendance at past events. Last year just 10 shareholders showed up, plus another five who listened in online.

At Monday’s electronic event 32 investors logged in, she said, out of 170,000 shareholders. “While we certainly understand the controversy surrounding the event, it’s a little surprising given the history of the meetings,” Haldeman said.

One goal was to create “an equal playing field” between investors attending both in person and online, she said, though Symantec is reviewing how it will run next year’s meeting.

Haldeman acknowledged the company paraphrased one of two questions asked during a Q&A period — apparently asked by Dohrs — and skipped four others typed after the session had ended. Three of those were objections to the format from Herbert’s firm, an issue she said “was already asked and answered.”

State rules vary on exactly how companies must interact with shareholders. At many small firms’ annual meetings executives outnumber the few shareholders who show up.

At the other end of the spectrum are the lavish 3-day shareholder weekends put on by Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) that attract tens of thousands of people.

Often the events feature unscripted moments all too rare in commercial discourse such as when the eccentric gadfly Evelyn Davis stands to berate CEOs.

“This is not North Korea!” yelled Alexander Denner of Icahn Partners to protest a maneuver at the Biogen Idec Inc (BIIB.O) annual meeting in 2009. Technically Denner was right since the meeting was held in Cambridge, Massachusetts.

But both Biogen and Symantec are incorporated in Delaware, where a 2000 rule change allowed companies to shift meetings to electronic settings with lower costs. Broadridge Financial Solutions Inc (BR.N), best-known for mailing other companies’ proxy forms, this year has staged 13 online-only annual meetings, up from just one in 2009.


But companies face a growing backlash from critics who say cheaper online-only gatherings should not replace regular ones. The California Public Employees Retirement System and the California State Teachers Retirement System reiterated that point to Symantec before its meeting.

Intel initially said it planned to host just an online meeting this year but added back a live session as well after complaints from shareholders including U.S. Proxy Exchange, a nonprofit corporate governance group in Massachusetts.

Symantec’s meeting also recalls other recent cases in which companies have tried to tone down noise from shareholders.

Data-storage maker EMC Corp EMC.N lost a pair of appeals to the U.S. Securities and Exchange Commission this spring asking to skip a vote on executive pay. Medical-devices maker Boston Scientific Corp (BSX.N) also drew barbs for barring journalists from its annual meeting in May, after it reported a $1.6 billion first-quarter loss.

Symantec itself has suffered setbacks some investors blame on poor acquisitions such as its $13.5 billion deal for storage software maker Veritas in 2004. Symantec’s shares trade at less than half the level they reached that year.

Symantec says it still included a pointed question on its performance during the online meeting, citing that as evidence it wasn’t stifling dissent. It supplied a transcript showing its head of shareholder relations read a question in which an unnamed investor asked what management would change since past deals “have repeatedly failed to return shareholder value.”

Critics at traditional meetings often draw attention from journalists and other investors. Symantec declined to identify this questioner, however, citing privacy concerns.

Reporting by Ross Kerber; Additional reporting by Noel Randewich; Editing by Christian Plumb and Richard Chang

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