Lirectors & boards report:2014 annual meeting survey: the annual meeting struggles for a relevant role in the new world of board/shareholder communications. Other processes are coming to the fore.

• Author: Shaw, David
• Position: 2014 ANNUAL MEETING SURVEY

IT'S MORE IMPORTANT THAN EVER for boards to focus their attention on effective shareholder communica-tions..Our survey on annual meetings and Shareholder communications continues to show increases in proxy activity, with 7% of responding directors noting that a proxy proposal passed last year, up from 6% the year before. And between 7-8% of respondents continue to report that the year's proposed slate of directors was not re-elected in its entirety.

And yet, several factors make communicating with shareholders harder than ever, including Reg ED concerns and the disproportionate weight of ownership by large institutional shareholders.

"Because of Reg I'D and for other reasons, I believe that the lion's share of shareholder communications should be handled by management," noted one director responding to our survey.

"I see no utility in board members answering the questions of small individual shareholders. However, if an institutional investor has a valid reason for requesting a meeting with a board member, I believe that the request should be honored at a time convenient for both."

But another director comments: "Disclosure and regulatory pressures put the average smaller investor. at a disadvantage?'

This leaves shareholders divided into two camps: those large enough to get the board's direct attention, and everyone else. And even then, effective communication with institutional shareholders isn't easy. As a director put it: "Investment returns and governance are typically handled by different groups at institutions, making it difficult to know with whom to engage. It would be helpful to have more transparency into the internal communications processes and decision making at the institutions so as to engage someone who is knowledgeable and a decision maker."

And, at heart, it is the board's job is to represent the inter ests of all shareholders. But how can boards do this, between regulatory pressure and the fact that no board has the time to talk with every shareholder?

The annual meeting seems to do little good in bridging the gap. The majority of attendees at a given annual meeting are individual shareholders, while 64% of respondents report that no institutional shareholders attend. And fixing the known problems with annual meetings will require legislation and rule making, not a likely outcome.

Many of the respondents to our survey offered suggestions apart from the annual meeting to improve shareholder communications with the board...