Many think annual meetings aren't worth their cost Bell & Howell will hold its gathering on the Internet


It's annual meeting time again, the season when publicly owned companies shower their stockholders with the undeclared dividends that make investing truly worthwhile.

That would be the shampoo, cake mixes and other company-made goods presented to stockholders in doggy bags their special day. Not to mention the inspirational speech by the ex-quarterback and the yodeling and rope tricks by a former Miss Wyoming.

But are annual meetings worth the cost and bother? Are they invaluable tangible assets to anyone other than the entertainers who get the gigs?

The mounting chorus says no.

Many companies, investors and academics are speaking out against the costs of renting hotels with all the fixings to hold annual meetings that are mostly dog and pony shows with fancy visuals and histrionic speeches, but with little more depth than financial reports that come through the mail.

Some of those companies -- including General Motors, Time Warner and American Express -- have reduced the financial costs by paring down the freebies and entertainment. They've also cut the time strain on top executives by not making them prepare for the meetings as if they were cramming for law boards.

One company is taking the annual meeting a step further. Bell & Howell, based in Skokie, Ill., will hold what appears to be the first virtual annual meeting on May 16 by assembling with its shareholders on the Internet.

Using free software sent by the company, investors will listen to the meeting on their personal computers and can e-mail questions to the top executives. Shareholders without Internet access will be able to obtain it for only $5, giving them a month on the Web in addition to "attendance" at the meeting.

"We wanted very much to be efficient," Chairman William White said of his company, which went public in 1995 after being held privately for seven years. "We knew a number of people would like to be there, so we decided to do this so they could ask all their questions without traveling."

Shareholders attending on the Internet will have to vote for the new board of directors by mail because the technology is not yet available for electronic secret ballots. And for those investors who crave absolute reality, an actual meeting will be held in Ann Arbor, Mich., the site of one of Bell & Howell's subsidiaries.

Mr. White doesn't expect many people to show up.

Most annual meetings have become "perfunctory and legalistic" get-togethers, said Mr. White, whose company has switched from making movie projectors to providing information services electronically.

"I think their day is past. All voting ultimately will be done online," he said.

None of the five corporations interviewed for this story would provide cost figures for their annual meetings. And the costs can vary greatly, depending on the number of shareholders and the program of activities.

"If there are 10,000 shareholders and you give them gifts totaling $30 each, then you've spent $300,000 just for those items," said Bruce Erickson, a professor of strategic management at the University of Minnesota's Carlson School of Management. "At that rate, I can imagine the entire cost of such a meeting at more than $1 million."

Mr. Erickson thinks the annual meeting is long due for changes, whether on the Internet or in a meeting hall.

"The management presentations tend to be too long, with the glitzy slide shows and all," he said. "People would appreciate it if they looked into the future instead of providing a long recitation of past history."

Mr. Erickson recommends that companies compress the routine business into the shortest time possible so there is plenty of time for shareholder questions.

"I think annual meetings should be handled like the consumer complaint department," he said. "Some of the questions and concerns of those people could be of real value to top management."

The age-old problem, of course, is posed by gadflies in the audience who may talk too much. If a company provides more time for questions, it can risk an exasperating couple of hours.

At American Express' annual meeting last week in New York, the large financial services company tried to find a happy medium by putting shareholders on a timer with a bell, limiting each to a total of 12 minutes to talk, with a requirement that they yield every two minutes for responses.

"It seemed to work pretty well. The bell only went off a couple of times," said company spokeswoman Susan Miller. The experiment also involved limiting the chief executive, Harvey Golub, to a shorter time for his comments.

Mr. Erickson has been to many annual meetings, but his favorite is a no-frills number run by Ag-Chem Equipment Co., a fast-growing Minnetonka, Minn., manufacturer of farm machinery.

Asked for the company's secret, Ag-Chem senior Vice President John Retherford said, "We don't do a dog and pony show. It's just the facts, plus coffee and a cookie."

Pub Date: 4/28/96

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