Duke Energy is facing growing pressure to reverse a decision to push its upcoming annual shareholders meeting online, a move announced earlier this month that eliminates the Charlotte company’s long-running tradition of in-person meetings.
Shareholders large and small have voiced frustration with the company since its announcement of the May 4 meeting, which will be streamed live on video.
Duke says the new format makes it easier for its shareholders worldwide to access the meeting, noting other large companies have made a similar switch. Others argue the decision feels like an attempt by Duke, whose meetings have sometimes drawn protests in uptown Charlotte, to silence its critics.
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“It’s a deflection,” said Jim Warren, executive director of NC WARN, a Durham nonprofit and Duke shareholder that has been highly critical of the electric utility’s practices.
“I think citizen watchdogs that are willing to attend and show up at those meetings … that’s all part of trying to hold corporate executives accountable,” said Warren, whose group has demonstrated at past Duke meetings. “This is hiding from debate.”
The chorus of concerns has grown louder this week.
On Wednesday, the Council of Institutional Investors, an association whose members include some of the largest pension funds in the U.S., urged Duke to add an in-person component to the online meeting. In a letter to members of Duke’s board, the association said a physical meeting reinforces trust and good faith between a company’s leaders and its owners, the shareholders.
“We feel strongly that public companies serve their best long-term interest when directors and managers avail themselves at least annually to in-person, face-to-face interaction with all shareholders, regardless of size,” the association wrote.
It’s a sad commentary on the status of Duke Energy that its senior management and board are not willing to face the public at a shareholder meeting in their own hometown of Charlotte.
Frank Holleman, senior attorney for the Southern Environmental Law Center’s Chapel Hill office
Also Wednesday, the California State Teachers’ Retirement System, the second-largest public pension fund in the U.S., sent a letter to Duke expressing concerns over cutting the in-person meeting.
Technology that allows shareholder meetings to be held virtually is an “excellent opportunity” for companies to increase shareholder participation and for companies to save money on in-person meetings, noted CalSTRS, which holds about $143 million in Duke shares and more than $44 million in Duke bonds.
“However, the annual in-person meeting often represents the only time that shareholders, particularly small shareholders, have the opportunity to interact with management and board members,” the letter says.
Duke spokeswoman Catherine Butler said Wednesday the meeting change accomplishes the company’s goal of making the event available to more of Duke’s roughly 1 million shareholders in more than 30 countries.
Many of those shareholders haven’t been able to attend the company’s in-person meetings in the past, Butler said, noting the virtual option makes participating much less expensive for investors.
“Our main thing was just easy access for our shareholders and reaching more, and the vast majority, of our shareholders,” she said.
Duke joins a swelling list of companies killing the practice of holding in-person annual meetings and shifting the events online, though the vast majority of public companies continue to offer a meeting investors can physically attend.
Computer giant HP, fitness gadget-maker Fitbit and online-review site Yelp are among companies whose annual meetings have gone completely virtual.
According to Broadridge Financial Solutions, a New York firm that provides the technology for virtual shareholder meetings, 149 companies last year held meetings in which investors could participate only via audio. That’s up from 86 in 2015 and just 18 in 2010. The figures are only for companies that used Broadridge’s service.
Last year, Broadridge helped six companies hold video-only meetings, up from 1 in 2010.
Our main thing was just easy access for our shareholders and reaching more, and the vast majority, of our shareholders.
Duke Energy spokeswoman Catherine Butler, on the company’s decision to hold its annual shareholders meeting in a virtual-only format
“There’s definitely a trend toward virtual-only,” Cathy Conlon, vice president of corporate issuer product and strategy for Broadridge, which is supplying the technology for Duke Energy’s meeting this year.
Another factor driving the trend is the lower cost to hold a meeting online, Conlon said, pointing to expenses associated with a physical meeting such as venue and security costs.
Butler, the spokeswoman, declined to disclose how much Duke spends on its annual meetings. Potential costs savings by going virtual didn’t drive the company’s decision, she said.
She said the virtual format will provide new options for Duke shareholders, such as the ability to voluntarily submit questions online beforehand. Shareholders will also be able to submit questions online-only during the meeting, she said. Whatever questions Duke cannot get to during the meeting, the company will answer later and post those responses online, another new feature this year, she said.
Shareholders can also listen to the meeting on the phone but not ask questions that way, she said.
Butler said Duke opted not to provide an in-person and online meeting together because the company wants shareholders to have a “consistent experience” and offering both options would involve investors making trade-offs.
The one chance to grill the CEO
Critics of virtual-only meetings say they rob mom-and-pop investors of the one time a year when they get to hold the CEO’s feet to the fire in person. Companies typically interact with their largest shareholders, such as pension funds, throughout the year.
“For the average investor who doesn’t attend shareholder meetings, this debate might seem like a molehill. But this is a meeting that was created for the owners,” said Glenn Davis, director of research at the Council of Institutional Investors. “It only makes sense to let them make their own decisions about how they want to attend.”
Over the years, Duke’s shareholder meetings have sometimes provided a bit of spectacle.
Costumed demonstrators upset over the company’s environmental policies have rallied outside the events in Charlotte. Last year CEO Lynn Good faced tearful questions from a shareholder about well contamination near Duke’s coal ash ponds, and protesters were escorted out by security guards after interrupting Good.
Such scenes are not unlike those Bank of America once generated at its shareholder meetings in Charlotte following the financial crisis, though the bank continued to hold the events in the city.
“It’s a sad commentary on the status of Duke Energy that its senior management and board are not willing to face the public at a shareholder meeting in their own hometown of Charlotte,” said Frank Holleman, a senior attorney for the Southern Environmental Law Center’s Chapel Hill office.
“The obvious reason for this maneuver is Duke Energy’s activities, particularly with respect to coal ash and drinking water supplies, have attracted the serious concern and criticism of the public,” Holleman said. “Their own shareholders and the senior management and the board did not want to be held publicly accountable for their actions as they have in the past.”
Butler, the Duke spokeswoman, said the company is “open to dialogue with all of our stakeholders, and this format will allow us to continue that dialogue.” Duke has had overall positive feedback from large and small shareholders since announcing the meeting change, she said.
Shareholders looking to oppose the steady march toward virtual-only meetings might not find support from the Securities and Exchange Commission. In December, the regulator told HP it could block a shareholder vote on a proposal to restore its in-person meetings.
Conlon, of Broadridge Financial Solutions, said companies that drop in-person meetings tend to do it for good.
“We have seen rare instances where a company goes back,” she said. “Usually when they go virtual-only, they stay virtual-only.”