This is a follow-up to my post on September 17th, at which time I had submitted a letter concerning Symantec’s imminent (9/20) virtual-only annual meeting to Symantec Chairman John Thompson and CEO Enrique Salem. Breaking from tradition, Symantec (SYMC) had informed shareholders that it would host a virtual-only annual meeting (via audiocast). While the situation looked bleak for shareholders, despite the presence of some of the titans in the activist space, the Symantec annual meeting drama appears, for now, to have ended amiably.
Reasons Symantec cited for not holding a traditional in-person meeting were the lack of shareholder attendance and cost-cutting measures. Not a shareholder of Symantec myself, but having reviewed Symantec’s proxy filing and in light of its meeting plans, I decided to support the shareholder rights preservation efforts of the United States Proxy Exchange. I argued that any cost savings for Symantec would be a mere drop in the bucket (compared to billions of dollars Symantec shareholders have seen disappear from stock buybacks and M&A that have failed to enhance its stock market value), and also more to the point, that proper safeguards for a virtual-only meeting were severely lacking, especially for non-insider shareholders (i.e. the potential for a variety of abuses by management was high).
Not only did Symantec ignore the entreaties of CalPERS, CalSTERS, and a handful of other institutional and individual investors, the meeting itself was anything but a success in the eyes of shareholders. First, the meeting was audiocast, so there was no video to prove insider attendance, which also made it impossible to see insiders’ faces as they reported information and answered questions. To make matters worse, shareholders reported having their questions ignored and not having any way of resubmitting them or receiving technical support, thus negating a key aspect of shareholder meetings. Two reader comments to my re-post on Seeking Alpha noted the hasty manner in which the meeting was conducted, reportedly only allowing 15 seconds for questions and voting, hardly enough time to do either. Another issue was the inability to see other shareholders’ questions. Note the US Proxy Exchange has a comprehensive list of concerns on its website.
On September 25th, Gretchen Morgenson of the New York Times, published, “The Perils of the Online Shareholder Meeting: Questions, and Directors, Lost in the Ether.” Her reporting covers many of the matters mentioned above. It also notes that only 8 of 11 directors (all eleven were up for re-election) attended; information that was not made available to investors, nor are the names of those that were absent, since Symantec wouldn’t disclose them. Symantec’s directors earn approximately $250K annually, according to a review of the company’s proxy by Ms. Morgenson, for duties that are arguably closer to being a sinecure than to some grueling or highly challenging position truly worthy of such lofty compensation. Directors who are supposed to be responsible to shareholders, and to whom the executives are to be held accountable to, have not performed well at Symantec as is evidenced by the actions that the company has taken and the resulting diminished market capitalization. Obviously the board is not independent, which is part of the problem.
Nevertheless, the news we had been waiting for arrived on October 5th, when Reuters reported that Symantec decided to restore its “live” investor meeting. The pre and post-annual meeting dissatisfaction voiced by shareholders and individuals concerned about shareholder rights was ultimately taken seriously by Symantec. Its Annual Stockholders Meeting page on the Investor Relations section of its website explains that after an evaluation of its Sept. 20th annual meeting and hearing “feedback” from stockholders, it is “committing to hosting a hybrid stockholders meeting going forward. This will enable our stockholders to participate either in person or via the Internet depending on what best suits their needs.” Further, Symantec says that as a leader in the technology market, it is compelled to be an early adopter of technology. Let’s hope that its vendors can provide a much improved platform for shareholders to attend virtual meetings should they choose to do so, one allowing for more visibility (transparency) and interaction with other shareholders and executives.
Symantec shareholders as well as investors at large should be pleased with Symantec’s decision. And although it came after Symantec carried out a contested virtual-only meeting, the meeting has proven to be a valuable learning experience as it justified shareholders’ and investors’ concerns about proper safeguards. Meanwhile, a lot of uncertainty remains about the virtual shareholder meeting platform. As a member of the US Proxy Exchange, I am co-authoring a white paper on virtual meetings; our focus is to identify key issues and opportunities, seek member input, and publish final virtual meeting guidelines. I encourage all investors to visit the USPX and learn more about virtual shareowner meetings.
Disclosure: At the time of publishing, the author does not have any position in shares of Symantec.
