A nice feature on the Estée Lauder annual meeting ritual – a gathering of mostly older ladies dressed to a T, gathering for a continental breakfast “beautifully displayed,” a gift bag of cosmetics, and genteel conversation – lightens up p.1 of The Wall Street Journal today.
It is a nostalgic image, of a time when shareholders formed bonds of loyalty and companies cultivated that. As today’s headline says, “Estée Lauder’s Annual Meeting Is a Pampered Affair.” The shareholders’ questions, of course, dealt with issues of makeup.
I’m a fan of annual meetings and have attended many. A few, mostly consumer companies, offered product samples or showed off their wares. Some had the atmosphere of a reunion, including firms with many retiree-shareholders, where the focus was more internal than external. Some have been family affairs, revealing sons and daughters of the founder as mid-level executives (that tells you something). An occasional meeting has brought confrontation between activists and a CEO. Some at company locations have included tours. Coffee, or even breakfast, is a nice touch.
To me, the more personal events are nice. I can’t argue that these affairs pay for themselves, but they make a kind of statement, “We care about you, our shareholders, our owners. We report to you.”
Of course, the investor relations team is likely to provide planning and logistical help for the annual meeting. This brings me to my point: Whether large or small, all-business or old-home-days, an annual meeting is about reporting to shareholders, answering their questions and receiving any input. It is like a one-on-one with the big institution, but democratized.
I think it’s too bad when companies, noting that only a handful of investors will attend, reduce the annual meeting to a reading of the lawyers’ script, going through the motions of voting on board seats and executive pay, and then adjourning after 10 minutes. They say it’s because no one attends but, then, why would anyone? It’s a vicious circle – and becomes a pointless date on the corporate calendar.
In my experience, annual meetings also can bring out the deepest concerns of shareholders. “Are you planning to cut the dividend?” was the first question at one I attended. “What’s your plan to turn around declining sales?” “Is the strategy failing?” “Will this acquisition destroy value?” Real questions. Investor relations in the relationship sense.
So I say, bring on the gift bags, a video of the new plant – but, above all, an explanation of the strategy for next year and how we are going to build the value of the business for the future. What do you think?