AT ONE U.S. COMPANY, the machinations were in place for a hostile takeover by a rival at this year's annual shareholder meeting.

On the front lines was the meeting planner.

The corporation waging the takeover bid was planning to do so via a proxy battle on the floor of the meeting, scheduled to take place in May. When word of the maneuver reached the targeted company, brass decided to move the meeting up six weeks to thwart the attempt, which meant some quick thinking on the part of the planner.

“A lot of things came up that I'd never had to consider before,” says the planner, who wishes to remain anonymous. For starters, she had to find a new venue on short notice, one that could accommodate more than 1,000 people if a crowd did indeed show up. Then there was the issue of hiring outside security and alerting local police officials that the meeting might be contentious. “We were looking at bringing in metal detectors like you see in airports,” she says. And because the company was trying to keep the location hidden, she had to book space anonymously as an independent planner. “It was very covert.”

As it turned out, the government intervened before the shareholder meeting took place, and the proxy battle didn't happen. Now, the battle between the two companies is being fought in court.

While these types of displays are still the exception rather than the rule, they are happening more frequently. Shifting shareholder demographics, market globalization, new corporate governance legislation such as the Sarbanes-Oxley Act, and the emerging power of special interest groups are making their mark on annual shareholder meetings, says Barbara Strand, PhD, president of Psych/Consult Systems, a Mount Vernon, N.Y.-based management and organizational development consulting company. “Shareholder meetings are changing drastically,” she says. “Traditional management-controlled ‘dog and pony shows’ are going by the wayside as savvy, activist shareholders, bolstered by recent legislation, are holding executives' feet to the fire. You'd better prepare thoroughly — or get burned.”

Enter Sarbanes-Oxley

The latest watchdog of corporate responsibility is the Sarbanes-Oxley Act, which seeks better accounting oversight. As a result, investors have become more empowered and encouraged to initiate change. “Shareholders have been emboldened by some of the successes they've had, as well as the success of the Sarbanes-Oxley Act,” confirms Scott Green, director of audit and compliance at the international law firm of Weil, Gotshal and Manges LLP, New York, and author of A Managers Guide to Sarbanes-Oxley: Improving Internal Controls to Prevent Fraud.

As a result, companies that used to rely on their corporate communications people to prepare senior executives for annual meetings (with help from legal counsel and investor relations) are increasingly hiring outside consultants. Mellon Human Resources and Investor Solutions, based in Ridgefield Park, N.J., is one such company. MHRIS publishes an annual guide to planning shareholder meetings, which encompasses the logistical and consultative sides of the equation and works with executives and board members on potentially contentious items.

More than in past years, corporate clients want to know what questions to expect from shareholders at the meeting, says Ron Schneider, product manager for the proxy solicitation group at MHRIS. “My group gets more and more inquiries than before about the questions being asked at other client meetings this year.” These questions may relate to employee grievances, governance or social issues, compensation, philosophy, company direction, the board of directors, succession planning, and a host of other topics. Because the winds change so quickly, company officials want to know what's hot now, not last year or even two months ago, Schneider adds.

On the Front Lines

Security also has become a much bigger issue at shareholder meetings. Genuity, an Internet service company that was acquired by Level 3 Communications, Broomfield, Colo., last year, makes sure to have a large contingent of security on hand in the event of protesters or the possibility of physical violence. It is not alone. “When the meeting is open to the public like that, you're increasing your liability,” and the potential for harm to executives and staff, says Rebecca Oteri, former meeting planner for Genuity.

Earlier this year, for example, hundreds of demonstrators protested outside Halliburton's annual meeting in Houston, and five people were arrested.

On the other hand, some say that transparency has gone a long way toward reducing the likelihood of violent activity. “I think that you'll see less physical danger on the floor of the annual meeting than there may have been in the past, partly because of the higher level of reporting and disclosure that's going on,” says Jim Osborne, president and chief executive officer of the Osborne Group, Calgary, Alberta.

Companies have always used their shareholder meetings to make a certain impression on the public — and that's even more true now, says Jaclyn Bernstein, president and partner, Empire Force Events, New York. “Most of the events we do are normally for a contained group,” says Bernstein, whose company plans shareholder meetings for several Fortune 100 corporations. In contrast, shareholder meetings are “quasi-public” in that they're open to all shareholders, so you're not quite sure who will show up.

Laura Yarbrough, who used to plan meetings for a large high-tech company, was charged with creating her organization's first shareholder meeting from the ground up. To prepare, the planning staff got permission to attend other shareholder meetings in the area to get an idea of the meeting structure.

Looking back, Yarbrough says they went overboard in some areas and were lacking in others.

One of the areas she overlooked was food and beverage. “We provided water and peppermints only for the attendees,” says Yarbrough. “No coffee or soft drinks, no cookies. I think this made us look cheap.” Another mistake was not allowing the board of directors to mingle with the attendees afterward. This was done for security reasons, but it gave the impression to some that the company had something to hide, she explains.

Strategic Site Selection

Choosing the site for the annual meeting is yet another area of meeting planner responsibility that has shifted in recent years, says Michael Schron, manager of new business development at Robert P. Schron Associates Ltd., New York, a meeting and incentive services firm. Annual meetings are often now held in second- and third-tier cities in order to shave expenses and keep the focus on the meeting and not the destination, he says. Picking a modest venue over a five-star resort gives the perception of a cost-conscious organization, adds Oteri.

There is also a trend toward holding meetings on-site at corporate headquarters. “While this is intended to minimize meeting costs, often the facility chosen is somewhat remote or in a not-so-appealing destination, which seems to be intended to discourage large numbers of people from attending,” Schron says.

Yarbrough made the mistake of renting a civic center that was way too big for her company's inaugural annual meeting, she recalls. The facility could accommodate 2,500; only 300 people showed up.

Taking it Online

Glitzy presentations — which were more common in the 1980s and 1990s — don't usually fly with today's more-informed individual shareholder. “At some companies, the annual meeting had become almost a multimedia show to impress the general public,” states Schron.

However, there has been significant growth in the number of shareholder meetings being webcast to investors — 24 percent in 2003 alone, according to, a division of Maynard, Mass.-based “Webcasts illustrate a company's openness and transparency,” says Bradley Smith, director of marketing communications. Plus, shareholders have the option of accessing the meeting after it's over.

McDonald's Corp., Oakbrook, Ill., has been broadcasting its annual meeting live over the Web since 2000, says Lisa Ciota, director of investor relations. “We look at webcasting as an opportunity to make it more convenient for more shareholders,” explains Ciota. “We also believe that using the Internet is a real effective way of getting the McDonald's story out directly to investors.” Before 2000, McDonald's was routinely attracting around 1,500 people a year to its annual meetings; since then, the number of live attendees has been cut in half. This year's meeting, held at the McDonald's campus, brought in between 600 and 700 shareholders.

The hurdles in planning the annual meeting for McDonald's differ from year to year, explains Ciota, depending on variables such as the performance of the company or whether there are shareholder resolutions to consider. The biggest shift has been the no-nonsense focus on business. “At one point, we were more consumer-oriented. It was more of a pep rally,” says Ciota. “Over the years, we've become more business-message focused.”

Coming in September


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