Financial History Issue 127 (Fall 2018) | Page 16

ANNUAL SHAREHOLDER MEETINGS From Populist to Virtual By Lawrence A. Cunningham and Stephanie Cuba The 1933 annual meeting of Exxon- Mobil, then Standard Oil of New Jersey and among the world’s oldest and larg- est corporations, was a gathering of five people at a New Jersey gas station. By 1977, the company’s annual meeting filled the 2,000-seat Houston Music Hall and in 2018 still draws thousands to a similar Dallas venue. These dramatically different attendance numbers point us to the history of the corporate meeting. Chief protagonists are John and Lewis Gilbert, brothers who chose fighting for shareholder rights as their life’s work. Their motives appear in Lewis Gilbert’s portrayal of the problem in his 1956 book, Dividend and Democracy: In 1932, the typical annual meeting, often tucked away in some remote rural hideaway, was usually attended by no more than a silent dispirited baker’s dozen who listlessly listened to the mechanical legal jargon by which insiders re-elected themselves to do as they pleased. Through the 1930s, large US corpo- rations were owned mostly by a small number of influential banks, financiers and dynasties, such as Morgan, Rock- efeller and Vanderbilt. But as the Great 14    FINANCIAL HISTORY  |  Fall 2018  | Depression stoked suspicions of concen- trated corporate power, Congress passed banking, securities and tax laws that fos- tered diffuse share ownership. Individuals nationwide came to own stock in American companies, and the Gilberts spent five decades advocating for them. Their legacy of shareholder engage- ment endures, though the US shareholder base since 1980 re-concentrated, with ris- ing ownership by pension funds, mutual funds and other institutions. The legacy is relevant to emerging debates over whether annual meetings should continue to be held in-person any- more, or instead solely online, as several public companies have recently begun doing. This modern development stirs debate about the purpose and value of shareholder meetings. History sheds light on the stakes. Shareholders gather ahead of the Berkshire Hathaway annual meeting in Omaha, Nebraska, on Saturday, May 5, 2018.