September 21, 2001
Shareowners Rally to Defeat Online Annual Meeting Provision in Massachusetts
by Mark Thomsen
Online annual meetings viewed as reducing shareowners' and the public's ability to hold companies
responsible for their actions.
Shareowner activists succeeded recently in getting Massachusetts state legislators to nix the
provision of a bill that would have allowed companies to hold their annual meetings over the
Internet. After some wrangling, a revised bill was passed by the Senate and has gone back to the
House for approval.
"Our success points to the power of our collective action as
shareholders, consumers and citizens and reminds us that when we are organized our democracy does
indeed work," said Scott Klinger, Co-Director of the Responsible Wealth Project of United for a Fair
Economy. Responsible Wealth was a leader in organizing the effort to have online annual meeting
The provision was stated as follows: "the board of directors may, in
its sole discretion, determine that the meeting shall not be held at any place, but may instead be
held solely by means of remote communication."
The bill, including this provision, had
passed the Massachusetts House of Representatives in July with little publicity. When in late
August the bill was taken up by the Senate for possible approval, it was noticed by Boston-based
Neighborhood Assistance Corporation of America. That organization quickly notified other
organizations with an interest in maintaining face-to-face shareowner meetings.
of the bill claimed online meetings would increase shareowner participation, particularly among
those located a great distance from the meeting site. They also said online meetings would allow
companies to save money. Politicians supporting the bill said they were also trying to make
Massachusetts more business friendly and competitive with Delaware, currently the only state that
allows online annual meetings.
A press conference was organized and held outside the
office of Senate President Thomas Birmingham on August 23rd. Amy Domini, founder of Domini Social
Investments, activists from other non-profits, as well as representatives from social investment
firms Trillium Asset Management and Walden Asset Management emphatically stated that the bill would
take away a fundamental right of stock ownership. The conference attracted media attention and was
instrumental in persuading the Senate to take another look at the bill.
Two major backers
of the bill were EMC (ticker: EMC)
and the Associated Industries of Massachusetts. EMC, a manufacturer of data management and storage
systems, is based in Hopkinton, Massachusetts. Over the two weeks after the press conference,
opponents of the provision vied with EMC and Associated Industries for Senate support.
shareowner activists were eventually victorious, with the state Senate passing a bill on September
6th that allows companies to broadcast annual meetings over the Internet, but still requires
face-to-face meetings. The bill also allows companies to send proxy statements via the Internet to
As online annual meetings require companies to have greater data storage
abilities, EMC potentially could have profited from the bill in terms of increased business. But
EMC may also have had an interest in being able to quell difficult questions from critical
According to Stephanie Haug, Assistant Portfolio Manager at Walden Asset
Management, EMC tried to do just that by changing the question and answer format at this year's
annual meeting in May. Instead of allowing microphones in the audience, EMC asked shareowners to
write their questions and submit them.
When it was apparent Walden's questions regarding
diversity issues at EMC would not be chosen, Timothy Smith, Senior Vice President at Walden, had to
storm the stage and ask his questions to EMC Executive Chairman Michael Ruettgers before Ruettgers
could leave. Even though Walden has subsequently started a dialogue with EMC, the company still
refuses to disclose its Equal Employment Opportunity data.
"The technology industry is
expected to become one of the largest employers in the future, so diversity is a concern for social
shareholders," explained Haug. "Other companies, like Intel, for example, openly disclose their
Equal Employment Opportunity data."
This anecdote only reinforces that a face-to-face
annual meeting is a critical right of stock ownership. Haug said there is an effort underway to
lobby the state of Delaware to rescind the law allowing online annual meetings. Since the law was
passed last year, no company registered in Delaware has tried to hold its annual meeting online.
Shareowner activists want to ensure it stays that way.