Attend annual meetings to find stories

Some journalists believe it’s a waste of time to attend annual meetings, because many meaningful issues are decided in advance of the events, and because in some cases, dominant shareholders determine the outcome in advance. But Melissa Preddy, a veteran business journalist, thinks the meetings are too valuable to pass up.

“The meetings are a good place to mingle with corporate executives and to beef up your contacts list with the names of active shareholders, directors, analysts, bloggers, community leaders with corporate ties and other stakeholders,” Preddy wrote in a blog for the website of the Donald W. Reynolds National Center for Business Journalism.

Read her article at: http://bit.ly/HPaTwk

In preparation for the annual meeting, journalists should carefully study a company’s proxy statement, the notice to investors, or ballot, usually issued about six weeks in advance of the meeting. (For a definition of “proxy,” please see the Glossary.)

The proxy statement, in countries where stock exchanges or securities regulators require them, should include details about several matters. However, in many newly created stock exchanges, disclosure requirements are minimal and enforcement is weak. Still, it is worth checking proxy statements for:

  • Details about compensation for executives and directors, including special benefits and loans

  • Issues that will be presented for a vote at the annual meeting, including director elections

  • Background and experience for director candidates should be provided, so that shareholders can make an informed decision

  • Share option grants

  • Information about existing directors’ experience and other board affiliations

The information for any proposal to be presented at the annual meeting should be clear and complete. If not, journalists should ask why.

The proxy statement may also contain information about “related party transactions,” where companies disclose deals made with their own executives and directors (see Chapter 5 for more on related party transactions).

For more information on how to find story ideas in a proxy, see Melissa Preddy’s “Mine Proxy Statements for Executive Pay and Other Stories”: http://bit.ly/J7XjAt

Reporter's Notebook

Alexey Navalny, an activist lawyer and blogger in Russia, bought a few shares in several of the country’s largest companies and then began investigating their practices. He discovered that OAO Transneft, Russia’s monopoly pipeline operator, had made $112 million in charitable contributions in 2009, almost eight times the amount of dividends paid to investors.

The charity contributions had been going on for several years, and reached $300 million in 2007 alone. Meanwhile, Transneft cut dividends to private shareholders by 75 percent from 2003 to 2009, even as its profits were rising.

The company refused Navalny’s repeated requests for documents to show where the charitable contributions were funneled, leading him to observe, “No one [has] seen any traces of this charity.

“I spoke to many managers and employees of the biggest charity organizations, and they said they’d never seen this money.”

http://bloom.bg/HAykpC

Read a profile of Navalny by The New Yorker’s Julia Ioffe: http://nyr.kr/HGk4Bz