I was asked to cover one more virtual annual shareholders meeting for this season: General Motors Company. Since I’m not a GM shareholder, I attended as a guest. So, I can’t comment on the ease of entry, voting, or asking questions, but I saw a few interesting things.
Second Time Virtual-Only
GM’s switched to the virtual-only shareholders meeting ("VoSM") format in 2019. The Proxy Statement for that occasion included a note from the chair of the board’s Governance and Corporate Responsibility Committee that read:
Why did the Board decide to adopt an online format for the 2019 Annual Meeting?
Your Board believes the online format will enhance attendance by providing convenient meeting access to all of our shareholders, regardless of where they live – not just those shareholders who have the time and means to travel to an in-person meeting. Over the past five years, attendance at our Annual Meeting has averaged less than 35 shareholders. This year, even shareholders without an internet connection or a computer will be able to listen to the meeting by calling a toll-free telephone number. In addition, we believe the online format will provide a better opportunity for shareholders to communicate with your Board by submitting questions before and during the meeting through the online portal and by calling in live via telephone during the meeting. Finally, the online meeting format will also eliminate many of the costs associated with holding a physical meeting, which is a smart choice for GM and its shareholders. We look forward to increasing participation this year while lowering operating costs for the Company.
That’s a good summary of why most companies that moved to a VoSM before this year made the switch. This year’s GM Proxy Statement had a different note regarding the VoSM:
GM currently expects that its Annual Meeting will be held via a live video webcast; however, as of the date of this mailing, COVID-19 continues to spread around the world and throughout the United States, including Michigan. If it becomes necessary due to public health considerations and the need to comply with federal, state, and local restrictions on gatherings and movement, we may need to conduct the Annual Meeting in an audio-only format. If this occurs, the Board of Directors and certain members of management will dial in to the webinar from remote locations and will not be present in person.
At the end of today's meeting, they announced that about 180 shareholders and guests attended. About 125 attended last year’s meeting. That's pretty good compared to the previous average of 35 in-person attendees.
Get up early!
After an ad reel for a fleet of cool GM automobiles, the live meeting commenced at 8:00 a.m., EDT. That’s somewhat of an early start in my book, but it must be brutal for a shareholder on the West Coast who wants to attend. In the days when we all did in-person annual meetings, starting first thing in the morning was perfectly normal. For companies moving to VoSM, you should be mindful of the start time to be courteous to your shareholders throughout the 48 contiguous states. I don’t know what the commonly accepted etiquette is for all US time zones, but I’m guessing 11:00 a.m. EDT is considered fair.
GM Chair/CEO Mary Barra opened the meeting and said that normally they would be broadcasting the meeting live from a studio, but this year decided against that to avoid having the principal actors in close quarters due to COVID-19 concerns (per the proxy statement excerpt above). She noted that all director nominees were in attendance remotely.
The VoSM site was standard for what you’d see at any other, and they posted the Annual Report, Proxy Statement, Agenda, and Rules of Order for the meeting. GM’s Agenda and Rules of Order were particularly reader-friendly, and I recommend them as models for next year. Importantly for lawyers, they included a cautionary note on forward-looking statements and a note on the use of non-GAAP measures.
After Barra’s welcome, GM’s corporate secretary handled a number of formal pieces of information, including an announcement that shareholders could ask questions through the question box on the screen or by calling in using a dedicated phone number. (More on that later.) He announced that the polls would remain open until the end of the formal portion of the meeting.
Barra then moved through each item of business, allowing three minutes for each of the four shareholder proponents on the line to present their proposal. John Chevedden went first and may have gone a few seconds over three minutes, but they didn’t cut him off. The third and fourth proponents also called in to present their proposals, and neither used the full three minutes.
The second proponent did go over, and Barra politely asked him to wrap it up after he went past four minutes. This proponent is the kind that a lot of other shareholders don’t like and frankly gives shareholder proponents a bad reputation. He basically rambled on, unscripted, about his various and highly critical thoughts about the company, its board, how the company is run, what the company’s performance (including particular cars) has been, and a litany of things that bore no relation to the substance of his proposal, which was to amend the company’s proxy access bylaw to “enable as many shareholders as may be needed to aggregate their shares to equal 3% of [GM] stock for 3-years in order to enable shareholder proxy access.”
This person wasn’t anywhere near the Evelyn Y. Davis level, but he clearly stood out from most shareholder proponents who in general are very professional in their public communications. There are so-called shareholder “gadflies,” like the late Mrs. Davis, who show up at many annual meetings each year, and then there are company-specific gadflies like this guy. My basic Internet research shows that he’s a GM retiree and the son of a very accomplished automobile designer who had a long career at both GM and Citroën. He also once upon a time ran a proxy contest (under the slogan "Return GM to Greatness") to get himself, Chevedden, and a few others elected to the GM board. (They each received 676 out of about 465,000,000 votes cast.)
A few companies have their company-specific gadflies who show up every year. Some are respectful and file shareholder proposals on important topics. Others deliver screeds against the board members and executives during the Q&A sessions. Some, like Mrs. Davis, are very disruptive, made ad hominem attacks, and won’t adhere to the rules of order or cooperate with the chair’s requests for them to stop their outbursts. Management preps in advance on how to handle these people should they try to dominate the meeting to the detriment of the other shareholder who want to ask questions, or otherwise raise a ruckus. The few extremely rowdy ones become famous within the corporate governance community, but that’s about it.
(War Story: At my former company, we had our own gadfly who had a real beef with my boss, then the corporate secretary. There was an audible groan in the room whenever she stood up to ask her annual question, which was once a complaint that we had shut her down the year before. (We didn’t.) This was all quite amusing for those of us in the Office of the Corporate Secretary!)
Preliminary voting report
The polls closed and the formal portion of the meeting ended at 8:31 a.m. after the secretary delivered the preliminary voting report:
Directors nominees: All elected with an average of 98% support.
Say on Pay: 96% support
Say on Pay frequency: 97% support for annually (as proposed by the board)
Ratification of auditor appointment: 99% support
New long-term incentive plan: 96% support
Shareholders’ right to act by written consent: 41% support
Amendment to proxy access bylaw: 21%
Human rights policy implementation report: 31%
Lobbying communications and activities report: 33%
The secretary announced that the preliminary voting report would be posted on the company’s website (they posted it on the investor relations page and in a press release by the close of business), and the final report would be filed on a Form 8-K within four business days as required.
The company then ran a pre-recorded video of Barra talking about GM’s business, how the company was handling the COVID-19 pandemic (including making ventilators for hospitals), and about the company's commitment to employee diversity and inclusion, the current events related to the death of George Floyd, and support for the Black Lives Matter movement. (Read her statement to GM employees, dealers, and suppliers below.) The video included other video footage and lasted for just under 20 minutes.
The Q&A session was interesting in that GM allowed shareholders to call in on a dedicated phone line to ask questions live on-air. This is something I didn’t see any other company do this year, and I would consider this a Best Practice. My guess is that GM has a decent proportion of retail investors, probably a lot of company retirees, and many of them are in the demographic that prefers to use a phone rather that submitting typed information through a computer. The company also solicited questions in advance.
The corporate secretary announced that during the Q&A session, the company would answer a selection of questions that came in before or during the meeting, and it would post written Q&A covering a representative set of questions germane to the meeting that they weren’t able to get to during the live Q&A. The proxy statement had told people pretty much the same thing in advance:
Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. If there are questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints, management will post answers to a representative set of such questions at investor.gm.com/ shareholder. The questions and answers will be available as soon as practicable after the meeting and will remain available until GM’s 2021 Proxy Statement is filed.
For shareholders who called in to ask questions, they were allotted two minutes each. The Q&A session lasted 15 minutes, during which they fielded a mix of questions submitted in writing in advance of and during the meeting and live questions from the phone line. After that, Barra gave some closing remarks and ended the meeting at 9:07 a.m.
Mary Barra's Message to GM Employees, Dealers, and Suppliers
There is a Big Difference Between Seeing What’s Wrong and Doing What’s Right...
The recent deaths of George Floyd, Ahmaud Arbery and Breonna Taylor astonishingly add to the important and unconscionable list of black Americans who have lost their lives based on the color of their skin. I am both impatient and disgusted by the fact that as a nation, we seem to be placated by the passive discussion of “why.” Why does this happen? Why can’t we get to a different place? Why is the response so visceral?
Let’s stop asking “why” and start asking “what.” What are we going to do? In this moment, we each must decide what we can do – individually and collectively – to drive change… meaningful, deliberate change. As one of the largest global companies, there is much we can do.
There comes a time when we are compelled to stop diagnosing what is wrong and start advocating for what is right. And based on our longstanding values, here is what that looks like:
1. We commit to inclusion – that means creating the conditions where every single human who believes in inclusion is welcome within our walls.
2. We unequivocally condemn intolerance – that means racism, bigotry, discrimination and any other form of named or unnamed hatred.
3. We stand up against injustice – that means taking the risk of expressing an unpopular or polarizing point of view, because complacency and complicity sit in the shadow of silence.
This Socrates post may seem more pointed than many of the other topics that I’ve shared. However, in this moment there is no place for ambiguity.
Putting this in writing is not enough. In addition to affirming the above principles, we are taking immediate action. Effective by the end of this quarter, I am commissioning an Inclusion Advisory Board (IAB) of both internal and external leaders, which I will chair. The initial purpose of the IAB is to consult with SLT [senior leadership team], with the longer term goal of inspiring us to be the most inclusive company in the world.
Collectively, and in time, we will be part of the change. For now, my personal commitment is to ensure that the leadership of GM, and by extension, the entire GM family, consistently remains aware of our responsibility to bring awareness to injustice. Because awareness leads to dialogue… dialogue leads to understanding… and understanding leads to change.