Financial History Issue 127 (Fall 2018) | Page 20

to sustainable profitability, and social responsibility through charitable giving, resonated with this group, while outside shareholder advocates cringed. Pressed by critics on board authority to allocate corporate profits to charitable causes, co- founder Ben Cohen explained: We’ve never taken a formal vote of all the shareholders, but at our annual meetings, I usually ask them—just a show of hands, it’s nonbinding—if they support the company’s support- ing the community and giving away what are really their profits. And they’re all in favor of it. The Ben & Jerry’s annual meeting was part of the company’s branding—achieved at low expense and producing consider- able returns. Meanwhile, in Omaha, Nebraska, War- ren Buffett began building what would become the most popular annual share- holder meeting ever at Berkshire Hatha- way. In 1975, a dozen attended in an office cafeteria, but then for three decades added a digit each—hundreds by 1985, thousands by 1995 and tens of thousands by 2005. In 2018, more than 40,000 attended, the record for a US public company, at the largest convention center in town. The Berkshire meeting’s main feature has long been a six-hour Q&A with Buffett and Vice Chairman Charlie Munger. But the Berkshire meeting has evolved into a three-day weekend extravaganza. The company has for decades hosted events on the days surrounding the meeting—a Friday night ball game, Saturday evening cookout, Sunday champagne brunch— and shareholders have added their own side-meetings, panels and speakers that alone draw hundreds or thousands. As recounted in an edited collection of essays, The Warren Buffett Shareholder, it is a series of energetic scenes of manager- owner partnership, a people’s capitalism the gadflies would love. Another mighty midwestern town, Fay- etteville, Arkansas, has been the scene of the Walmart stockholders’ meeting, most distinctive because of its conscious focus on employees. While founder Sam Walton hosted the first Walmart Stores annual meeting in 1970 at a coffee shop with five other people, throughout the 1980s, the meetings have added special events and celebrity guests to draw ever-larger crowds. The venue has moved from the Gadfly Lewis Gilbert at an annual shareholder meeting. headquarters auditorium to University of Arkansas arenas now seating 20,000. Walmart executives bound onto stage amid flashes of light and sound, met with roars of crowd approval. Managers get the crowd to spell out Walmart, declare that the store is number one and proclaim their love of the brand. Though Walmart remains an economic powerhouse serving its shareholders well, its identity is in its employees, which it affectionately refers to as “associates.” The annual meeting is their centerpiece. During this era, the corporate annual meeting also became a stage for drama. Many examples appear in a memoir by Randy Cepuch, based on visits to 50 annual meetings from 2002 to 2006. He captures poignant moments revealing the personalities behind corporate cultures: when Roy Disney and Stanley Gold led the ouster of Disney CEO Mike Eisner, and when Sandy Weill ended his amazing run at the helm of Citigroup to an enraptured group of applauding shareholders. The fate of Dow Jones was shaped at its annual meeting, including a persuasive argument made by noted value investor Mark Boyar that the Bancroft family should sell. Savvy managers today use the annual meeting to attract shareholders they desire—especially important for managers with long time-horizons seeking patient capital. At an annual meeting of South- eastern Asset Management, this enabled Chairman O. Mason Hawkins to boast: “We have the best shareholders in the mutual fund business.” The claim has 18    FINANCIAL HISTORY  |  Fall 2018  | rivals, such as Ruane Cunniff, which runs the famed Sequoia Fund. It cultivates intelligent long-term investors, attract- ing and retaining them in part through its annual meetings that draws a regular group of 1,000 in early May to New York’s Plaza Hotel. Today and Tomorrow: The Virtual Meeting? Since 2010, several large public companies have held annual shareholders meeting solely by electronic means, not conven- ing in a physical location, a so-called virtual-only meeting. Many had for sev- eral years supplemented annual meetings with digital feeds—such as Cisco System dating to 2005—and most others followed suit, including Berkshire Hathaway from 2016. But even now only a small fraction host remote-only annual meetings, amid controversy. Authorization to host virtual-only shareholder meetings was first enacted in 2000 by Delaware corporate law. Today, most state corporate laws permit the prac- tice. (Both federal law and stock exchange rules have tended to defer to state law on the manner of holding annual meet- ings.) In the first decade, a smattering of mostly-smaller companies opted in. They were led by such names as Ciber, ICU Medical and Inforte, and followed by the likes of Adaptec, Herman Miller and UAP Holding. During this period, a few big names put their toe in the water only to retreat under