While annual meetings of shareholders of public companies are required by law, not all companies take the same approach in the tone or presentation.
Two opposite ends of the spectrum are Akron-based FirstEnergy Corp. and Medina-based RPM International Inc.
FirstEnergy’s 2013 meeting was held in May for the first time outside its Akron headquarters. The meeting in Morgantown, W. Va., was marked by about 100 protesters outside next to an inflatable rat.
Inside, the approximately 75 attendees — including about 40 FirstEnergy employees — had to walk through metal detectors and get extra identification wristbands. The meeting lasted 16 minutes and Chief Executive Officer and President Anthony J. Alexander, the highest-paid employee in the company, did not take the podium.
In contrast, RPM’s annual meeting is usually 1½ hours long. It includes a musical group from a local high school, a food and beverage spread and goodie bags filled with about $20 worth of products from the makers of coatings and adhesives, including Rust-Oleum. The meeting includes business issues, remarks by CEO Frank Sullivan and a question-and-answer period.
Raj Aggarwal, a professor of international business and finance at the University of Akron, said as long as the required business portion of an annual meeting is completed, the agenda for the rest of the event is up to the company.
“I don’t want to make FirstEnergy a villain. FirstEnergy is by no means highly unusual in that regard, but I still would prefer that not to happen,” Aggarwal said. “Companies do that on a fairly regular basis, some companies more frequently than others. Other companies have a love fest or a party.”
The culture of annual meetings can vary depending on the company. At McDonald’s, the company allotted 30 minutes for anyone who owned stock and wanted to address top executives. At Cablevision Systems, police had to remove people after shareholders protested the company’s union pay policies. At NextEra Energy, Florida Power and Light Co.’s parent company, the meeting lasted 22 minutes, but the CEO called for questions from shareholders and there were none.
A year ago, about 600 protesters flooded an intersection outside Bank of America’s meeting in Charlotte. And Warren Buffett’s Berkshire Hathaway’s annual meeting is part rock concert, part investment workshop, part annual gathering for more than 30,000 people.
Aggarwal said it is a “reasonable expectation” for shareholders to expect to hear from their CEO at an annual meeting.
“For most companies, the CEO will present how the company did the last year and the prospects for the future and all that. Sometimes companies go into defensive mode like it seems FirstEnergy’s been doing,” Aggarwal said.
Tone changes at meeting
FirstEnergy’s annual meetings weren’t always so short, though the 2012 meeting was even shorter than 2013 at 10 minutes long. It was attended by about 200 people, including many workers who walked past 200 chanting protesters.
Prior to 2012, FirstEnergy’s annual meeting seemed more in the corporate mainstream — an assortment of breakfast food, a 20-minute PowerPoint presentation from Alexander about the highlights of the year, a business portion conducted and a question-and-answer-period. It was sometimes peppered with a confrontational question from a union representative on the subject of contract negotiations with the company.
Alexander did grant an interview with the Beacon Journal before the 2013 meeting. Asked whether the tone of FirstEnergy meetings had changed in recent years because the company had grown much larger with its acquisition of Western Pennsylvania electricity company Allegheny Energy, Alexander said the growth could be part of it, but “most companies seem to be experiencing more activist involvement at their annual meetings.”
The Allegheny acquisition made FirstEnergy one of the nation’s largest investor-owned electric systems.
Alexander said the planning of the meeting hasn’t necessarily changed, but “there’s obviously more security in order to assure that those that are interested in the real process that’s involved are not affected by what otherwise might be going on.
“This is a business meeting. We’re going to keep it on the business agenda, work through that and give the board sufficient time to tour some of the facilities we have in the area,” Alexander said. FirstEnergy’s acquisition of Allegheny expanded its geographic operations to West Virginia.
Asked whether not addressing the shareholders was a lost opportunity for people to hear from the leader, Alexander said, “I think at this point, the amount of contact we have with shareholders through just kind of the normal media events and the webcasts on the quarterly materials, provides them with far more information than what they’d get from a 20-minute annual meeting speech.”
One of the attendees at the Morgantown meeting was shareholder Ruth Weller. She said she drove an hour and a half from Wheeling, W.Va., with her friend, Joanna Gusta. After the 16-minute event, she called it a waste of her time.
Celebratory atmosphere
RPM’s annual meeting each October, held at the Strongsville Holiday Inn ballroom, attracts about 1,000 shareholders, said Barry Slifstein, RPM vice president for investor relations and planning.
“In this day and age, when the institutional shareholder is really dominating a larger proportion of an individually publicly traded company’s outstanding shares, we consider ourselves a little bit of a rare breed in that we still have 100,000 retail shareholders. These are individuals who are managing their own portfolios, saw something in RPM many years ago and have been rewarded,” Slifstein said.
“I had worked for a pharmaceutical company where 10 people came to the [annual] meeting and it was a very hostile meeting. This is more of an upbeat type of meeting ... a celebration, a love fest,” Slifstein said.
“We’ve got this band playing, people are happy, they get their goodie bag with a hot chocolate and a chocolate chip cookie and we go through the formalities of the annual meeting. Then we basically take every question that’s asked. Occasionally, you’ll get some activist person that wants a couple of minutes of floor time and he gets the floor as well,” said Slifstein.
Handling controversy
Aggarwal said even companies that are associated with controversial business issues, such as Wal-Mart Stores Inc. — and which have hundreds of protesters outside their meetings — will usually have the CEO speak and take questions from the floor. Walmart meetings also usually have entertainers, though this year’s meeting was dogged by vocal dissatisfaction from some prominent shareholders pledging to vote against board members. Walmart has dealt with issues involving overtime pay and alleged bribery in building a Mexican subsidiary.
“At least Walmart saw it as an opportunity to do some good public relations instead of hunkering down,” said Aggarwal, whose professorship is endowed by Frank C. Sullivan, CEO of RPM, but who has no connection to the RPM company.
Vineeta Anand, chief research analyst for the labor organization AFL-CIO, presented one of five shareholder proposals at the 2013 FirstEnergy meeting. All of the shareholder generated issues were defeated. Anand said a company whose meeting agenda contains a number of shareholder proposals is an indication that there is unhappiness among shareholders.
Aggarwal said that doesn’t necessarily mean that viewpoint is held by the vast majority of shareholders. He noted that shareholder proposals are often nonbinding, meaning a proposal could win the majority of votes and pass, but the company is not required to implement the new rule.
“It makes me uncomfortable that companies can simply ignore what the majority of shareholders want. I just feel like that’s not right in a democratic country,” he said.
FirstEnergy’s decision to take its meeting to West Virginia did not strike Aggarwal as a bad idea.
“Most companies that are smart move it around,” he said. “It was smart to take all of the directors to the Allegheny territory, so when you’re sitting in a boardroom in Akron, the board has a certain picture of the place,” Aggarwal said.
Betty Lin-Fisher can be reached at 330-996-3688 or by email at blinfisher@thebeaconjournal.com.