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OPINIONScrap the annual meetingBy Fraser SeitelFraser P. Seitel hasbeen a communicationsconsultant, author andteacher for 30 years. Heis the author of thePrentice-Hall text, ThePractice of PublicRelations.It is time once again for that annualritual where 14,000 public companyCEOs making tens of millions of dollarsare dragged kicking and screamingto drone on about the “past year’sprogress” and face a host of irreverentand irrelevant questions from tens ofshareholders gathered in convocation atthe Securities and ExchangeCommission-required “corporate annualmeeting.”I say “tens of shareholders,”becausethat, alas, is whattoday’s annual meetingstypically draw— a grab bag ofattendees, generallycomposed of lessth a n - i n t e r e s t e demployees who workin the building andare more or less obligatedto attend, oldpeople with little elseto do, and a dwindlingposse of aging“corporate gadflies,” whose intentionsin altering corporate governance areabout as pure as Donald Trump’s inchallenging the President’s birth certificate.Occasionally, one might alsoencounter a disgruntled ex-employeewishing to mix it up with the folks whohave done him wrong. But even theserecalcitrants are becoming harder tofind.The people who really matter — institutionaland individual shareholders —rarely attend the annual boondoggle.So here’s the point. Where once theannual meeting may have been justifiedin exposing secretive companies to atleast one day of open disclosure, intoday’s environment of the Internet andround-the-clock business journalism,the annual meeting — at least as it iscurrently composed — no longer makessense.It has become a colossal waste of corporateshareholder money and corporateexecutive time that reveals little andproves nothing. Clearly, the traditionalannual meeting should be replaced witha more efficient 21st century substitutethat fulfills SEC requirements and doesn’twaste everybody’s time and money.Here’s why annual meetings nolonger make sense:• Canned speech.Annual meetings invariably beginwith the CEO — and, if you’re reallyunlucky, the CFO — rehashing the“Letter from the Chairman” from thejust-distributed annual report. Rarely isfresh material included in these reports,because, frankly, most shareholdersdon’t read the letter. And even morefrankly, the annual meeting speech,delivered as it is before precious few ofthe shareholders, just ain’t worth it.So the result is recycled material,generally delivered in an uninspiredmanner by corporate officers goingthrough the motions.• Cooked votes.After the speeches, it’s time for theshareholders to vote for directors standingfor reelection, the outside auditors,and several shareholder resolutions.These are important pieces of business,but they’ve already been decided,through proxy, by the time the meetingcommences.Most of these proxy votes are cast byinstitutions, which control the vastmajority of votes. And rarely, if ever, ismanagement’s will challenged. So thevote is “cooked,” and the meeting votingis a charade.• Worthless questioning.The idea that shareholders get anopportunity to grill management is certainlya noble one in theory. It justdoesn’t work in practice.Annual meeting question periods aregenerally dominated by a small groupof wingnuts, who thrive on their annualmoment in the limelight by terrorizingchairmen with inane accusations andincessant babble. In the old days, gadflieslike the Gilbert brothers, Lewisand John, would put managementthrough its paces with pointed questions,based on their own knowledge ofaccounting.Today, the Gilberts have passed on,and 21st century gadflies are led by theimpenetrable Evelyn Y. Davis, the agingand certifiable loony toon, who hasmade corporate CEO’s lives miserablefor 40 years. (A friend of mine once hadto stop his chairman from taking aswing at the diminutive Davis, so thoroughlyhad she annoyed him).The point is that encouraging publicityseekers like Davis to spread theirwings once a year would seem to be theProfessional Developmentlast thing shareholders should be puttingon their tab.So what to do to rescue the annual ritualand bring it into the Internet age.Former Lockheed Martin ChairmanNorm Augustine has suggested thatshareholders should submit seriousquestions about the company; the outsideauditors should review them andselect a number to convey to management;and then management shouldrespond to shareholders with itsanswers on the Net.Another alternative, attempted byseveral companies, is a “virtual meeting,”at which holders submit questionsto management over the Net. Whilesome object that this negates the “spontaneity”of the in-person meetings, sucha format for most companies, if only forthe cost savings alone, makes greatgood sense.Of course, some in-person annualmeetings serve a purpose — Exxon’s ofa few years ago, when Rockefellerdescendants spoke in favor of separatingthe chairman and CEO. But theseworthwhile meetings are clearly theminority.In most cases, the annual meeting isas outmoded as the buggy whip. Thewhole concept ought to be scrapped forsomething that reflects the new mediaand a new day. News BriefsU.S. BUDGET NEEDS‘SHOCK TO THE SYSTEM’Politicians must reflect courage, ingenuity andresolve to bring back more than 17 million U.S. jobslost over the last decade, PR counselor RobertDilenschneider told PRSA’s Westchester/FairfieldCounty Chapter May 19.Dilenschneider, the former Chief of Hill &Knowlton, said he sees the potential for a “renaissance”in the U.S. and the recreation of a middleclass with a new emphasis on quality and craftsmanshipif urgently needed tax dollars will fundprojects through the country.“Business needs tax incentives, support fromWall Street, which will surely criticize them, and thebest possible advice they can get to plan competitivelyfor their own operations to make this happen,”he said at the Hyatt Regency Hotel event.Dilenschneider said the country first has to getits “budget in order,” which will take a “substantialrevisiting” of entitlement programs like Medicareand Social Security.“There has to be some shock to the system,” hesaid, noting the debt ceiling “will require seriousdebate” in Congress. “We should all applaud publicofficials with the courage to present us with somepretty unappetizing choices.”Dilenschneider sees hope that 64% ofAmericans are saving more and spending less and61% say they’ve re-thought their priorities in life.32JUNE 2011 WWW.ODWYERPR.COM