Canadian banks are meeting with shareholders via webcast amid the risk posed by the coronavirus.
Robert Prichard, chairman of the board at Bank of Montreal, spoke to the company’s shareholders via webcast Tuesday as COVID-19 containment measures saw him address a different kind of annual general meeting.
Other firms are set to follow as an April court order granted the country’s top banks and insurance companies the right to hold such meetings virtually. The format will also be used by TD Bank Group for its annual general meeting on Thursday, and with other banks over the next few weeks.
“These are extraordinary times,” Prichard stated, as the Bank of Montreal AGM got underway. “We regret we had to make this decision because it is important for us to meet in-person with shareholders and to give shareholders the opportunity to address the meeting in person.”
Richard Leblanc, a professor of governance, law and ethics at York University, told Bloomberg that the innovative method of addressing shareholders represented a “significant change,” but warned that not everyone was happy with online-only AGMs. Proxy advisory firms Institutional Shareholder Services Inc. and Glass, Lewis & Co. have long stated their opposition to them.
“Investors are always concerned that management is driving the bus and they are controlling the dashboard, so they have the ability to manipulate or suppress concerns in a way that adversely affects investors and that, in the view of investors, wouldn’t happen at an in-person meeting,” Leblanc said. “My response to that is management can also manipulate in-person meetings.”
According to Brigitte Catellier, the vice-president of corporate governance at Meridian Credit Union, some U.S. companies first held virtual AGMs in the early 2000s, but there weren’t any in Canada until 2017, and generally speaking, the trend has been slow to catch on. Speaking to Bloomberg, Catellier noted that hybrid AGMs–in-person gatherings with electronic participation — are more popular than virtual-only ones, but virtual-only AGMs still have advantages. “You can imagine that for a shareholder to come to the microphone in a large room with hundreds of people at the stage in front of the room can be intimidating,” Catellier explained. “In a virtual world, where you’re typing up your question in the chatbox, it’s a lot less intimidating and a lot more accessible.”
According to LeBlanc, companies moving to a virtual AGM should strive to emulate their usual meeting as much as possible. “It tends to go off the rails for the institutional shareholders and the activist shareholders if they feel surprised in any way, so the preparation ahead of the meeting is crucial,” he told Bloomerg. “The banks will set the tone for all the TSX companies, so it’s important to get this right,” Leblanc said, adding that he would not be surprised if boards and management stick to virtual only even after the pandemic.
“It’s difficult to go backwards,” he said.