The Future of Shareholder Activism

The outbreak of COVID-19 in the United States coincided with the season during which publicly traded companies hold their Annual General Meetings (AGM). As a result, I was able to attend this year’s shareowner meeting of The Coca-Cola Company (TCCC) while sitting in my kitchen in upstate New York. Like many other companies, TCCC canceled its in-person meeting and moved the event online.

The AGM nonetheless provided a means for gathering a diverse public around matters of concern and giving that public broad media coverage, which reached a wider audience.

AGMs are legally required rites of corporate capitalism. They are also one of the few opportunities for shareowners to engage directly with management and board members. AGMs, moreover, have grown in importance as vibrant sites of protest against corporate practices harmful to the natural environment, public health and the body politic. Senator Bernie Sanders turned up at the 2019 Walmart AGM to present a shareholder proposal, using the occasion to criticize the “starvation wages” paid to company employees and to express the outrage of the American people at “subsidizing the greed of some of the largest and most profitable corporations in this country.”

Consider last year’s Facebook AGM in Silicon Valley, where activist shareowners presented eight different proposals addressing both corporate governance structure and the company’s controversial policies regarding privacy and content such as political advertising. Frustrated shareowners peppered Facebook CEO Mark Zuckerberg with pointed questions during a tense Q&A session. Outside the meeting, a small group of protestors greeted Facebook shareholders with a large inflatable angry emoji, claiming the company poorly protected its users from hate speech and other abuses. A nearby protestor equipped with a red Make America Great Again hat and loudspeaker accused the company of censoring conservatives.

Zuckerberg’s legally unchallengeable control of Facebook voting stock of course rendered every one of the shareowner proposals moot, but the AGM nonetheless provided a means for gathering a diverse public around matters of concern and giving that public broad media coverage, which reached a wider audience. You can watch Senator Sanders speaking at the Walmart AGM on YouTube, which already has more than 16,000 views. What, then, are the prospects for this kind of tactical shareholder activism when AGMs go virtual?

At the 2020 TCCC AGM, there was only one shareowner proposal on the agenda, a resolution concerned with the deleterious heath effects of consuming sugary beverages. It was presented by Ray Rogers, a longtime labor activist and since 2003 director of Killer Coke, a campaign devoted to holding TCCC accountable for, among other things, alleged complicity in paramilitary violence against employees of Coca-Cola bottlers in Colombia. In 2004, Rogers was forcibly removed from the annual meeting held in Delaware, where the TCCC is chartered. He has attended many subsequent TCCC shareowner meetings, often going beyond his allotted three minutes during Q&A sessions to interrogate the CEO about the company’s business operations.

This year’s meeting was a live audiocast, later posted to the company website, in which Chairman and CEO James Quincey first presented items to be voted on, including election of directors and appointment of auditors. Rogers was then connected by phone and told that his line would remain open for exactly three minutes, with a warning issued 20 seconds before termination. He began by comparing “liquid sugar” to tobacco as a threat to public health, and decried the company’s “irresponsible marketing” among “populations and communities of color” disproportionately vulnerable to COVID-19. Rogers also accused the company’s “money grubbing executives and board members” of putting profit before the welfare of children, and he characterized their “outlandish compensation” as “sickening.”

Quincey responded narrowly with prepared remarks to the resolution’s call for an independent report on the role of sugar in disease causation by claiming that “additional reporting” would produce “no useful information not already covered” in existing reports. He explained that the company fully understood that “people should not consume too much sugar.” The meeting then moved on to a Q&A session in which questions submitted online beforehand or during the meeting were read by the corporate secretary and addressed by Quincey.

Easier access and increased attendance could come at the price of shareowners yielding further control over the terms of their interaction with corporate managers.

The interaction between Rogers and Quincey was more constrained than it likely would have been at an in-person meeting. Rogers had no chance to exceed his allotted time or interrupt the CEO’s response. Similarly, the Q&A session was less transparent. It was unclear how many questions had been submitted (limit two per person) or how they were selected. Some of Quincey’s responses sounded scripted, although I note that the question I submitted during the meeting suggesting voluntary reductions in executive compensation in response to the COVID-19 crisis was read and considered. There was no opportunity for shareowners to interact with each other at the meeting and no chat room. The agenda indicated an intention to complete the meeting one hour after its start at 8:30 a.m. Eastern Time; it ended about 9:22 a.m. This virtual meeting format afforded even less freedom for meaningful dialogue than that available at in-person meetings.

Advocates of virtual AGM meetings say they are more accessible to shareowners and actually increase attendance. Their argument makes sense. This year’s virtual PepsiCo AGM, which I was also able to attend, was originally to be held in the company’s out-of-the-way birthplace of New Bern, North Carolina. Last year’s in-person AGM for Eastman Kodak was held in New York City. Still, I was the only shareowner attending who was neither a board member nor a company executive or employee. One of the executives with whom I spoke admitted that he wished the company could hold virtual-only meetings as a way to reduce costs, but the Business Corporation Act in New Jersey, where Eastman Kodak is chartered, does not allow that possibility—except for this year, in response to COVID-19.

Although the norm for public companies in the United States is to hold in-person AGMs, 30 states, including Delaware, allow virtual-only meetings. Will the move to virtual meetings prompted by COVID-19 prove permanent in the United States and elsewhere? If so, then easier access and increased attendance could come at the price of shareowners yielding further control over the terms of their interaction with corporate managers. This possibility has alarmed activists. ShareAction, for example, reports that Rio Tinto, a huge mining company roundly criticized by activist shareowners for its climate change strategies, has proposed to change its Articles of Association such that an AGM may be held in a physical location, “by electronic facility,” or both.

Next year might tell whether COVID-19 has offered corporate directors and managers an escape from having to come face-to-face once a year with the likes of Ray Rogers and Bernie Sanders.

Robert J. Foster is professor of anthropology at the University of Rochester and author of Coca-Globalization: Following Soft Drinks from New York to New Guinea.

Cite as: Foster, Robert J. 2020. “The Future of Shareholder Activism.” Anthropology News website, June 25, 2020. DOI: 10.14506/AN.1447

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