Hot Topics for Annual Meetings. Merger-and-acquisition issues are likely to dominate many '89 corporate gatherings
NEW YORK — IN the current climate of mergers, acquisitions, and leveraged buyouts, corporate annual meetings have acquired new significance. ``Annual meetings have always been important in terms of relaying information to shareholders,'' says Jack Casey, executive vice-president of Scudder, Stevens & Clark, an investment-counseling company. But the meetings may now have greater value, because ``of the increasing diversity of issues coming before a corporation.''
Questions about insider trading, takeovers, and shareholder rights should be major topics at annual meetings this year, says Daniel Jones, a partner in Deloitte, Haskins & Sells, one of the Big Eight accounting and tax-consulting firms in the United States.
``Shareholder meetings now have a broad impact because of the presence of the press,'' Mr. Jones adds. ``There is a great sense within the corporation that the general public is aware of the meeting.''
So corporate executives and their advisers are already preparing for these sessions, most of which occur in April and May.
For the past decade, says Jones, his firm has issued a handbook on questions likely to be asked by shareholders. Among the questions this year:
Is the company considered a likely takeover candidate?
How do antitakeover measures adopted by the company enhance the value of the stockholders' investment?
Does the company have conflict-of-interest and code-of-conduct policies for all directors, officers, and employees? How is compliance monitored?
How does the company prevent introduction of viruses or other unauthorized access to its computer files by employees and outsiders?
Some company meetings have the potential for particularly hard-hitting questions about leveraged buyouts, experts note.
Consider financial houses, many of which are publicly held. A number of financial houses have both an investment-banking side, where bonds are sold for corporate clients, and a brokerage side, where stocks of publicly listed companies are sold, notes Mary Calhoun, a specialist on investor protection in Watertown, Mass.
``One aspect of a leveraged buyout is that the bonds of a takeover company often plummet in value after the takeover. But what if someone on the stock-selling side of the investment house knew of an impending takeover? Did the investment house have an obligation to inform potential bondholders?'' she asks.
Mr. Casey at Scudder raises the same issue. The increasing diversity of corporations, including investment houses, he says, has helped to erect barriers between corporate management and individual shareholders in terms of accountability.
When it comes to digging out specific information about a company, Alan Bromberg, a professor of securities law at Southern Methodist University, Dallas, finds annual reports and the textual public relations material accompanying them to be the most useful resources. But to get a broad sense of the direction and purposes of management, the financial information released by a company may not be as important as the report's public relations prose, he adds.