Banks improvise annual meeting plans as pandemic worsens
Banks are grappling with yet another thorny issue as the coronavirus pandemic quickens its pace across the United States — how to hold annual meetings in a time when transportation challenges are mucking up travel plans and social distancing is the new normal.
Typically, spring is the season when banks open their doors to shareholders who come to watch the election of board directors, the approval of compensation plans and, sometimes, the presentation of shareholder proposals ranging from director responsibilities to climate change issues. Often, investors get to hear from management about prior year performance and what is on the horizon.
This year, however, everything is different.
The threat of COVID-19 is forcing publicly traded banks of all sizes to figure out how exactly they will stage annual meetings without risking the health of bank management, directors and shareholders. Several are planning virtual meetings, but others — including some of the largest— are still trying to determine if they will change their plans, even as the dates of their meetings quickly approach.
“I would imagine most are going to wind up going to virtual meetings unless in the very near term this COVID-19 situation gets under control,” said James Dougherty, a lawyer at Jones Day who advises companies on corporate governance, shareholder activism, mergers and proxy contests. “As a practical matter, for a public company that has a meeting in the next two or three months, I think they will make the decision that virtual is the way to go.”
New guidance from the Securities and Exchange Commission provides some flexibility in what banks can do, given the circumstances. The March 13 memo from the agency says banks and other public companies may “change the date and location of the meetings and use new technologies,” including virtual meetings, in order to avoid the need for in-person shareholder attendance. The SEC also said it encourages companies to provide “alternative means” for shareholders to present their proposals.
Some banks have already changed their plans. Last week, U.S. Bancorp in Minneapolis, Capital One Financial in McLean, Va., Fifth Third Bancorp in Cincinnati and Zions Bancorp. in Salt Lake City announced plans to host their meetings online only.
In a press release, U.S. Bancorp said it will “move away from an in-person event due to the evolving nature” of the pandemic and instead host a one-hour virtual meeting on April 21. The $486 million-asset company told shareholders they may submit questions in advance when they register for the meeting, and it promised to provide any technical assistance that virtual attendees might need.
Other banks have not made a final call. The list of those trying to figure out what to do includes Wells Fargo in San Francisco, Truist Financial in Charlotte, N.C., and Citizens Financial Group in Providence, R.I.
Bank of America, the nation’s second-largest bank, is scheduled to hold its April 22 meeting in person in its hometown of Charlotte. The $1.9 trillion-asset company has told investors it is “actively monitoring" the COVID-19 outbreak and alternative arrangements including remote communication would be announced if it proves impossible or unwise to hold the meeting in person.
Meanwhile, New York-based Citigroup is on track to host its meeting on April 21 in Houston. But in the 2020 proxy statement to shareholders, the company said it might have to switch to a virtual meeting, in which case it plans to issue a release “as soon as practicable” before the meeting.
As of Tuesday, JPMorgan Chase, the largest U.S. banking company and also based in New York, had not released any plans about this year’s annual meeting.
Whatever avenue banks pick, Natasha Lamb wants to make sure she and other activist shareholders still get a chance to present at meetings. Lamb, a managing partner and portfolio manager at Arjuna Capital in Manchester, Mass., said her firm belongs to the Shareholder Rights Group, an association of investors that plans to make presentations at five large banks this year.
She said those presentations will get made, even though “investors tend to hate virtual meetings.”
“There’s no chance to be there in person, and that tends to be an echo-chamber situation,” Lamb said. “Hopefully this won’t be the new norm. Hopefully we’ll see companies have virtual meetings this year and then move back to having in-person meetings.”
Dougherty said he does not anticipate any long-term changes in how annual meetings are held.
“My gut tells me this is pretty unique given everything that’s going on,” Dougherty said. “You may see more hybrid meetings with in-person along with virtual. But I don’t think it will be a tidal wave shift.”
A number of community banks have scrambled in recent days to amend their bylaws to allow for virtual meetings.
More banks will likely turn to technology to conduct special meetings, too.
United Bankshares in Charleston, W.Va., said in a regulatory filing Monday that its April 2 meeting for investors to vote on its proposed $1.1 billion purchase of Carolina Financial in Charleston, S.C., would be held online. The $19.7 billion-asset United said shareholder questions and votes would be handled electronically.
While Carolina Financial plans to move forward with an in-person meeting for its shareholders, the $4.7 billion-asset company said in a press release that it would provide them with a virtual alternative.
Laura Alix, Jon Prior, Kevin Wack and Paul Davis contributed to this article.