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

61 Pages Posted: 27 Aug 2020 Last revised: 31 Mar 2021

See all articles by Yaron Nili

Yaron Nili

University of Wisconsin Law School

Megan W Shaner

University of Oklahoma College of Law

Date Written: August 26, 2020

Abstract

From demanding greater executive accountability to lobbying for social and environmental policies, shareholders today influence how managers run American companies. In corporate doctrine, the principal venue reserved for shareholders to exert their influence and engage with management and each other is the annual shareholders meeting. At one time 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. Today’s annual meetings are largely pro forma: only a handful of shareholders attend the meeting and voting results are largely determined in advance.

This Article explores how the integration of technology can resurrect the annual meeting as the deliberative touchstone of shareholder democracy it once was as well as open new avenues for engagement. The widespread use of virtual annual meetings in response to COVID-19 provides an opportunity to critically rethink and 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 vehicle through which companies can begin to address ESG issues and heightened public expectations that companies will work toward meaningful engagement 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 move to virtual meetings had on shareholder voting. Second, it provides a detailed account of how annual meetings have drifted away from their democratic function. Finally, this Article argues that technology can revive shareholder democracy and bolster ESG efforts through 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

Suggested Citation

Nili, Yaron and Shaner, Megan, Virtual Annual Meetings: A Path Toward Shareholder Democracy and Stakeholder Engagement (August 26, 2020). Boston College Law Review, Vol. 63, No. 1, 2022, Forthcoming, Univ. of Wisconsin Legal Studies Research Paper No. 1606, Available at SSRN: https://ssrn.com/abstract=3681578 or http://dx.doi.org/10.2139/ssrn.3681578

Yaron Nili (Contact Author)

University of Wisconsin Law School ( email )

975 Bascom Mall
Madison, WI 53706
United States

Megan Shaner

University of Oklahoma College of Law ( email )

300 Timberdell Road
Norman, OK 73019
United States
405-325-6619 (Phone)

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