On May 6, during my remarks in favor of a shareholder proposal at the Berkshire Hathaway annual meeting, my microphone was cut and I was arrested. The charge? Criminal trespass – even though I had meeting credentials, my name was on the agenda, and my organization’s resolution for an independent Chairman was in the proxy. As far as I know, the arrest of a shareholder during a proposal presentation had never before occurred at the annual meeting of a public company in the United States.
The charge was dropped two weeks later.
While citing the reputational risk to the company posed by Warren Buffett holding both the Chairman and CEO posts, and his close personal identification with Bill Gates, I uttered the name of Jeffrey Epstein, touching the third rail of billionaire relationships. I had never before been arrested but maybe I shouldn’t have been surprised. Increasingly, public companies are seeking to control and limit what happens at their annual meetings.
At least the Berkshire meeting was in person. Most public companies now meet virtually, a practice adopted during COVID. When the pandemic receded, management teams decided they rather liked the control that technology brought, so they stayed with the telephonic meeting.
In 2023, only a handful of companies such as Goldman Sachs and Verizon had the traditional in-person meeting where the CEO and board were present. Proponents of proposals were able to speak, and anyone who owned shares was welcome to attend.
The first casualty of the phone-in meeting was the amount of time allotted to proposal proponents. When I first began as a shareholder activist in 2004, it was not uncommon to get five minutes, and the limit was only gently enforced. CEOs realized that it was not a great look to cut off a complaining shareholder.
This year, we were allocated a grand total of two minutes on the Apple phone call notwithstanding the seriousness of our proposal asking for a risk assessment of doing business in China. And two minutes means two minutes. There’s not much deference or collegiality over the phone. If someone at Apple simply pushes a button, you are gone.
The least favorite part of the annual meeting for CEOs is no doubt the question-and-answer period. An alert shareholder, regardless of the size of one’s holdings, previously could scurry up to the microphone and ask a completely unscreened question. CEOs no longer must worry about this indignity because the company now has total control of the process. Questions must be submitted in advance so they can be softened, consolidated, ignored, or even inverted.
By law, annual shareholder meetings serve an important purpose. They are where the board of directors is elected, and any other business may be put before shareholders. It is the only event in which every shareholder has a right to participate. In recent years, however, companies turned the meetings into carefully staged events intended to make the CEO look good.
Now companies have found they don’t even have to put on such a show. A quick telephonic meeting will do. And they get the bonus of depriving management critics of the platform they enjoy just once a year. Morgan Stanley CEO James Gorman doesn’t miss the in-person meeting, recently asserting, “…while one or two people might like asking a question in person, I just don't think it's a good use of time and money.”
I didn’t expect Mr. Buffett to be happy with my criticisms, but I did not anticipate being hauled out of the arena, handcuffed, fingerprinted, mug shotted, and confined to the county jail until I could bail myself out.
Berkshire Hathaway’s attempted silencing of me is an ominous precedent for the rights of shareholders that cannot be allowed to stand. My organization, the National Legal and Policy Center, is seeking relief from the Securities and Exchange Commission. I hope the Commission will also undertake a general review of what’s happened to shareholders meetings.
Shareholder activists of the past like Evelyn Y. Davis and Wilma Soss, the inspiration for Carol Burnett’s “cleaning lady” character, certainly annoyed CEOs at annual meetings but they were never muzzled or arrested. Although derided as “gadflies,” they often raised important issues, but more importantly, they demonstrated that every shareholder is an owner and has rights.