Investors are Bored of Virtual AGMs

Welcome back to Troop’s monthly Insights newsletter.

We build tools for modern asset stewardship and we think out loud. In this space, you’ll find our latest analysis of the corporate governance space, plus peeks into our product suite’s development. Consider it a conversation about the future; reply if you’d like to share thoughts or learn more.
 

Wachtell’s Post-Holiday Tidings
 

While you were making your in/out trend forecasts for 2024, Martin Lipton, a founding partner of the white-shoe law firm and corpgov powerhouse Wachtell, Lipton, Rosen & Katz, was busy making a few predictions of his own. According to a memo he co-wrote just before the holidays, which has been condensed for Harvard Law’s Forum on Corporate Governance, 2024 will bring a host of new challenges for boardrooms. Among them: the inevitable chaos of election year infighting, the rise of generative AI as a cybersecurity risk, and the “flurry of new rules and regulations proposed by foreign and domestic regulators” expected to arrive in the coming months. Ultimately, it’s the most “engaged boards” that Lipton says are best situated to navigate this changing environment, and “to forge new paths toward long-term value creation for all stakeholders.”

Should a Company’s Climate Record Impact CEO Compensation?

A new paper from Stanford Law’s Rock Center for Corporate Governance suggests that while plenty of companies have pledged to reduce their carbon footprint, there’s no standardized regime for actually tying executive compensation to those goals. The way these researchers see it, creating these sort of carrot-and-stick financial incentives for CEOs might be a good way of ensuring results. If climate goals are met and emissions reduced, the CEO gets their bonus; if not—well, maybe next year.

The paper doesn’t mince words about how this works in practice: “Climate programs are most effective when goals are added to executive and senior-manager compensation contracts to fully align the organization with its commitments.”
 

Wait—Virtual Shareholder Meetings Are Boring?
 

Attendance at virtual annual general meetings is plummeting, per Agenda, as many companies continue to phone it in in more ways than one. AGMs were never the most exciting subcategory of investor gatherings—flashy tech developer conferences have long outshined Wall Street here—but the long hangover of pandemic-era remote calls and Zoom meetings has only widened that gap. Now, some shareholders are taking aim at what Agenda describes as a “check-the-box” phenomenon in virtual AGMs: the all-digital format keeps meetings too short, say critics, and only allows a few, obligatory minutes for faceless Q&A time.

Shareholder meetings are dense by nature, and today’s tech can and should lighten the load—but issues arise when attendees start to feel like they’re no longer getting as full a picture. Even if quick-and-dirty virtual AGMs end up sacrificing investor engagement, they do, in fact, save big on production costs. For some companies, that may just trump the attendance factor.
 

To learn more about how Troop’s corporate governance tooling can work for you, visit troop.com.