As the newly hired director of finance and investor relations for Inforte, a technology consultancy in Chicago, Tami Kamarauskas wanted to bring some innovative thinking to her post. This past spring she got her chance by running the company’s annual meeting with no worries over coffee, doughnuts — or security. Instead she made sure her CEO had a Web connection and fax machine available as Inforte went virtual.
“We heard about a new Delaware law that encourages electronic stockholder meetings, and it seemed like it would be effective and help us lower costs,” says Kamarauskas. There’s no doubt about the latter, but some concern about the former.
Inforte used an audio Web conferencing service available from PR Newswire, which provided a link on its Web site enabling anyone to listen in on the meeting. Before she decided on a virtual meeting, Kamarauskas had allocated $20,000 for the traditional, face-to-face variety, a price that covered meeting space, security, and printing. The virtual version cost $2,000. Inforte’s saving is actually greater since it doesn’t take into account the productivity gains that were realized when employees weren’t needed to staff the meeting.
There were a few drawbacks. For one thing, the company decided not to use online voting because costs would have canceled out much of the $18,000 saving. Instead, stockholders faxed in their votes, which required a manual tally. And one analyst argues that an email Q&A session is a poor substitute for the give-and-take of the real thing. “There’s a legitimate purpose for getting everyone in one room, which is asking questions and having stockholders talk among themselves.
Perhaps some of them even engage in serious debate,” says Robert Sterling, a brokerage analyst with Jupiter Research. “I’m not sure whether, with email, a lot of tough questions get through.” Companies thinking about holding their own virtual stockholder meetings must make sure that such meetings are legal where they’re based. Delaware is the only state that explicitly permits them, although legislation is pending in Massachusetts and other states. Current statutes dealing with annual meetings were written long before virtual meetings were possible. If a state doesn’t expressly bar virtual meetings, a company may be able to make a case for them.
As far as Kamarauskas is concerned, Inforte is sold on the concept. “We think the Web is entirely effective, and there’s no reason to add a physical component to the meeting,” she says.