Face the music.

• Author: Rock, Robert H.
• Position: LETTER FROM THE CHAIRMAN

BRACED FOR ANOTHER HARANGUE from an itinerant corporate gadfly, my fellow directors were surprised when he lauded the board at our annual shareholders' meeting this winter. Although he began by questioning why we had chosen the coldest day of the year to hold the meeting, intimating it was to keep attendance down, he ended by complimenting the directors for sitting up on the podium facing our shareholders. In his 40 years of attending (agitating may be more precise) shareholder meetings around the country, he noted that he rarely saw directors sitting "eyeball-to-eyeball with their owners and facing the music."

Thinking back on the scores of annual shareholder meetings I had attended over the years, I was surprised that I could not recall any other board where I sat face-to-face with stockholders. More typically I sit with my fellow directors facing the podium. At the beginning of the meeting the chairman introduces each director who, in turn, stands and nods to the assembled audience. We then settle back in our chairs and watch the show.

Annual shareholder meetings are usually pretty cut and dried; carefully scripted and well-rehearsed performances that march through certain prescribed business such as election, or more often than not, reelection of the outside auditor. The whole process is usually over in under an hour. As one of my fellow directors observed, annual meetings are "Soviet" in their precision and routine. Often the majority of attendees are company employees, and those outside shareholders who show up often seem more interested in the food and free samples. Few questions are...