Comments on: Halliburton Annual Shareholders’ Meeting Location

By: The Harvard Law School Corporate Governance Blog » An Inconvenient Location for the Annual Shareholders’ Meeting

Thu, 19 Apr 2007 23:55:13 +0000

[...] As most proxy season observers know, one of the oldest tricks in the book for defusing angry shareholders is to hold the annual stockholders’ meeting in some far-flung location, as noted in this recentÂ Wall Street JournalÂ article.Â I’ve blogged about this topic once in a blue moon (or left comments on other blogs). [...]

By: Broc Romanek

Broc Romanek — Wed, 17 May 2006 17:33:28 +0000

If you look at some the pieces written when Delaware and other states were adopting laws to allow for the e-only meetings, they talk about the purpose of annual meetings. I wrote these FAQs about e-meetings long ago:
http://www.realcorporatelawyer.com/faqs/faqmeetings.html. Probably the most telling item along these lines were the letters that CII sent to CEOs of large companies when Delaware passed their law, basically threatening companies if they tried to do an e-meeting. That’s probably why only two very small companiess have ever tried an e-only meeting even though these laws have been on the books 5 years or more.

As for Halliburton, I think the location speaks for itself – although it purely is conjecture. But there are plenty of clear instances of companies
picking hard-to-reach locations – such maneuvering by some of the governance poster-children companies is not much of a big secret (although companies now are less prone to publicly admit it in these days of governance reform).

And here is a blog on the topic I did a while back: http://www.thecorporatecounsel.net/blog/archive/000113.html

Thanks, Broc

By: Bill Sjostrom

Bill Sjostrom — Wed, 17 May 2006 16:16:35 +0000

Your points 1 and 2 are well taken. As for your third point, how do you know Halliburtonâ€™s meeting location was selected because management is scared to face shareholders (as you seem to imply)? If that were the case, they could have picked a more remote or inconvenient location. The reference to a bylaw amendment was not meant to suggest micromanagement by the shareholders but was made in light of the fact that this is an area that Delaware law specifically contemplates being addressed in the bylaws. Also, Iâ€™m curious as to the basis of your statement that â€œthe purpose of the meeting is to allow shareholders the opportunity – just once a year – . . . to confront management if they so choose.â€? Iâ€™m actually working on a law review article that explores the justifications for the annual meeting requirement, so have researched it. Iâ€™ve seen â€œconfrontationâ€? mentioned in one article by an Australian law prof. relating to virtual meetings, but confrontation is not mentioned in the MBCA, the Delaware Code, the single case Iâ€™ve located that addresses the issue, or any of the exchangesâ€™ materials. Did I miss something?

By: Broc Romanek

Broc Romanek — Wed, 17 May 2006 14:52:50 +0000

A few thoughts:

1. 100 shareholders can be a lot if it contains a significant number of your largest holders.

2. The level of attendance at a prior meeting doesn’t necessarily mean attendance will be the same at a subsequent meeting because issues might arise at a company over the course of a year that will draw larger numbers of shareholders to attend.

3. Why should shareholders be required to propose a bylaw amendment for something as simple as the location of an annual meeting? Are we living in an age where shareholders must propose bylaw amendments for the hundreds of actions that comprise sound corporate governance. What company wants that type of micromanagement (and what type of shareholders have the resources to undertake that effort). If management is scared to face shareholders – doesn’t that say an awful lot about the “tone at the top”?

The bottom line is why bother even holding an annual meeting if your logic is followed. The purpose of the meeting is to allow shareholders the opportunity – just once a year – for shareholders to confront management if they so choose.

Broc Romanek
Editor, TheCorporateCounsel.net