Virtual Annual Meetings: A Path Toward Shareholder Democracy and Stakeholder Engagement

Abstract

From demanding greater executive accountability to lobbying for social and environmental policies, shareholders influence how managers run modern companies. In corporate doctrine, the principal venue reserved for shareholders to influence and engage with management and each other is the annual shareholders meeting. Historically, the annual meeting was a vibrant forum for shareholder democracy and occasionally even a platform for debating pressing social issues. For decades, however, the role of the annual meeting in corporate governance has been in decline, resulting in today’s largely pro forma annual meetings.

This Article explores how technological integration can resurrect the annual meeting as the deliberative touchstone of shareholder democracy it once was and open new avenues for engagement. The widespread use of virtual annual meetings in response to COVID-19 provides an opportunity to re-envision the practice and purpose of the annual meeting. If structured properly, virtual meetings can re-engage historically absent shareholder demographics while maintaining the efficiencies of proxy voting. Additionally, virtual meetings can serve as a vehicle through which companies can begin to address environmental, social, and governance (ESG) issues and heightened public expectations that companies will meaningfully engage with their varied stakeholders.

This Article makes three key contributions to the existing literature. First, it provides a detailed account of state reactions to COVID-19 and of the impact that the transition to virtual meetings had on shareholder voting. Second, it describes how annual meetings have drifted away from their democratic function. Finally, this Article argues that technology can revive shareholder democracy and bolster ESG efforts by facilitating retail shareholder and corporate stakeholder engagement, and underscores how virtual meetings can meet these important goals.

Keywords: Shareholders, Corporate Law, Virtual Meetings, Corporate Democracy, COVID-19, ESG, Stakeholders, Main Street Investors

JEL Classification: K10, K22