Virtual-Only Annual Meeting: Risks and Governance Concerns

A virtual-only annual meeting, where shareholders participate exclusively online and cannot attend in person, reduces barriers to attendance in some ways but undermines other shareholder protections—limiting the ability of investors to ask impromptu questions, coordinate with peers, and physically demonstrate presence or dissent. Institutional investors and governance advocates have raised concerns about whether virtual-only formats weaken shareholder accountability.

The Trade-off: Access vs. Accountability

Companies often adopt virtual-only annual meetings for efficiency: no venue costs, no travel for attendees, easier moderation, lower security concerns. During the COVID-19 pandemic, virtual-only became the default. Many firms have kept it, even as in-person gatherings resumed elsewhere.

But governance experts and institutional investors argue that virtual-only weakens the bargain between shareholders and management:

• In a physical meeting, a shareholder can stand, speak, be heard, and be seen. Management must respond in real time, on camera. A viral moment of dissent can shift market perception.
• In a virtual-only format, the company controls the camera angles, moderates the chat, sets time limits on questions, and can selectively unmute speakers or end the stream. Questions can be screened before being asked. Troublemakers can be muted or removed.

This asymmetry of power is the core concern. A virtual meeting is easier for the company, not necessarily fairer to shareholders.

Specific Participation Risks

Limited Unscripted Dialogue

In-person meetings allow shareholders to ask follow-up questions, push back on evasive answers, and challenge management in real time. A virtual format often restricts questions to submitted Q&A or a moderated chat, removing the back-and-forth. A shareholder cannot respond “but you didn’t answer my question” if the meeting ends after the prepared agenda.

Reduced Peer Coordination

Shareholders often attend meetings to coordinate with other long-term investors, trade insights, and build consensus on key governance votes (director elections, say-on-pay). In a virtual setting, there is no hallway conversation, no informal networking. Each shareholder is isolated, making it harder to organize support or opposition to a proposal.

Visibility and Signaling

A large institutional investor attending the annual meeting in person—and asking pointed questions—sends a signal: we care enough to show up. Walking out early or sitting silently in displeasure are forms of non-verbal communication that matter to other investors. Virtual attendance is invisible. A shareholder can be on Zoom while half-listening and multitasking.

Technical Barriers

Not all shareholders are equally comfortable with online platforms. Older retail investors, international shareholders unfamiliar with U.S. meeting norms, or those with unreliable internet may struggle. Paradoxically, virtual-only can exclude some while claiming to broaden access.

What Governance Advocates Are Saying

The Securities and Exchange Commission permitted fully virtual annual meetings in 2020 and has not mandated a return to in-person or hybrid formats. But major proxy advisors have taken positions:

• ISS (Institutional Shareholder Services) recommends that companies offer a hybrid option (in-person and virtual) and flag virtual-only as a governance concern in their reports.

• Glass Lewis similarly prefers hybrid meetings and notes that virtual-only “may impair shareholder communication and engagement.”

Institutional investors including CalPERS, CalSTRS, and various state pension funds have written letters opposing virtual-only meetings, arguing that shareholder democracy requires the ability to confront management face-to-face.

The Company’s Perspective

From management’s view, virtual-only solves real problems:

• Venue and travel costs drop
• Attendance is often higher (logging in is easier than flying to a hotel)
• Moderation is tighter, reducing the risk of disruption or prolonged hostile questioning
• The meeting runs on schedule; there is no “chaos” or unexpected delays

Some companies frame it as more inclusive: international shareholders and those without mobility can participate. This is partly true, but it conflates access (being present) with power (being heard and heeded).

Hybrid as a Middle Ground

An increasing number of companies are adopting hybrid annual meetings—offering both in-person (at a physical venue) and virtual attendance. This allows shareholders who want to attend in person to do so while also serving those who prefer virtual access. Proxy advisors view hybrid more favorably than virtual-only because it preserves the in-person accountability option.

However, hybrid raises logistical costs and complexity. The company must ensure that virtual attendees have equivalent Q&A access, voting rights, and ability to be heard. In practice, virtual participants sometimes feel like second-class attendees.

The SEC and Regulatory Landscape

The SEC has not mandated hybrid meetings. As of 2024, companies may choose virtual-only if they disclose the format in proxy materials. The SEC requires that companies allow shareholders to vote, attend (in whatever format offered), and submit questions, but not that they offer in-person attendance.

This regulatory permissiveness reflects both the SEC’s deference to company choice and the pandemic’s normalization of virtual work. However, if institutional investor push-back intensifies, or if a major scandal involves a virtual-only meeting (where uncomfortable questions were silenced), regulatory or legislative attention could follow.

Long-term Governance Implications

Virtual-only annual meetings are a test case for shareholder democracy. If they persist, the implicit message is that shareholder meetings are informational events for distribution (like a press conference), not true deliberative forums. This fits a broader corporate-governance trend toward efficiency over democratic process.

Some scholars warn that virtual-only weakens the last formal lever of shareholder power—the annual meeting. If shareholders cannot meaningfully confront management and be heard, their main recourse shrinks to selling shares (exit) rather than engaging (voice). In concentrated shareholdings (founder-led companies), this tilts the balance further toward management.

Others counter that virtual meetings are inevitable and that the real issue is what rules govern them—Can management selectively mute questions? Do all shareholders have equal Q&A time? Can the stream be recorded and reviewed later?—not whether the meeting is virtual at all.

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