A Management–Shareholder Partnership
By Eve Tahmincioglu
Shareholder meetings come in all shapes and sizes, but it’s not the swag and rock stars large investors are looking for.
“We like meetings that are open and honest, and where management interacts well with shareholders,” says Trip Miller, managing partner at Gullane Capital Partners. “We think it’s important for the management team and the board to view investors like partners.”
That means, he continues, spending a lot of time taking questions and educating shareholders and the general public on the company. That doesn’t mean shareholder meetings shouldn’t be grand.
The four shareholder meetings he’s attended and considers great examples include Berkshire Hathaway Inc., FedEx Corp., Biglari Holdings Inc., and Fairfax Financial.
His favorite is Berkshire, seen as Woodstock for capitalists. “I see Berkshire as the be-all and end-all of shareholder meetings,” he adds.
Big blowout meetings, he explains, make a lot of sense for companies that use the events to promote their products and create opportunities for shareholders and prospective shareholders to learn about and get excited about the company. “I can assure you Berkshire is getting a high return on their investment in their meetings which are like a buffet line of all their products. And there’s also the economic impact on the city,” he adds.
While he doesn’t expect a lot of board involvement during most of the meetings he attends, he does appreciate how involved Berkshire’s vice chairman and director Charles Munger is at meetings, fielding questions and driving the company culture.
Getting to hear from top business minds such as Munger is a big draw for Miller, and that’s why he also likes FedEx shareholder meetings because he gets to hear from Fred Smith, the founder of the courier company. “He invented the overnight delivery phenomenon,” he says, “and he still fields questions in his 70s.”
What’s also unique about FedEx’s meeting is that questions are limited to three minutes, but shareholders can ask whatever they want and get answers.
Biglari, which owns Steak ‘n Shake and Maxim magazine, has a similar style to Berkshire, with the CEO Sardar Biglari spending hours answering questions. “If you’re willing to sit up there and answer questions that have not been filtered, we like that,” he says.
Although, he did question the company’s decision this year to hold the meeting at the ritzy St. Regis Hotel in Manhattan instead of something like a Holiday Inn.
But in the end, transparency rules.
The chairman and CEO of Fairfax Financial, a Toronto-based holding company, V. Prem Watsa, is very transparent and focused on shareholder engagement, even writing an annual letter to them, ala Berkshire’s Warren Buffett.
“What we love about all these guys is that when they make a mistake they’re open about it at meetings,” he adds.