Attending the Annual Shareholder Meeting
Attending to Important Matters
Most shareholders would agree that attending their annual meeting is an activity low on their priority list, right after flossing their teeth and organizing their sock drawers. Some feel the meetings are boring, while others feel they don't need to be there as long as their building is running smoothly. Others simply just don't care.
Why don't people feel the need to attend annual meetings? There are benefits and advantages of non-board residents attending their meetings and boards and managers sometimes grasp for ideas on how they can get more participation from residents.
Reasons People Skip Out
People will skip their annual shareholder meetings for a variety of reasons. They might be too busy. They might not care. Or they might look at their smoothly-run building and think, "Everything is going fine as it is. Those in charge don't need me."
"Everyone thinks that the board is doing everything possible to protect their interest," says Chandra Jain, a management consultant in Kew Gardens, Queens, and president of Queens Corp. Condo Corporation "The better a co-op is operated, the less attendance you have [at a meeting]. If you have questions about maintenance or the building is falling down, then you have more people showing up to voice their complaints and displeasure. If everything is running smoothly, nobody wants to go."
Other shareholders might simply be lazy, too busy or apathetic about their building's daily business, which often is uninteresting to residents.
"Most people like to have others do the work for them," says Andrew Brucker, of the law firm of Schechter & Brucker, P.C. in Manhattan, which represents over 160 co-ops and condos. "Shareholders do not like to get involved unless there is a problem or an increase in maintenance. But normal everyday co-op business is not exciting and shareholders would rather not be involved."
Every building has different rules for when and how often to hold shareholder meetings. Most bylaws, however, allow for one annual meeting to inform shareholders about building business. The bylaws also will state how much notice boards and managers are to give shareholders regarding the meeting.
"The rules regarding the calling of the meeting are both in the Business Corporation Law (BCL) as well as in the offering plan," explains Jain. "Normally, the notice should be at least ten business days and not more than 40 business days."
But even though shareholders are given plenty of notice about the annual meeting, often a very small percentage will attend.
"Basically, people who buy into a co-op or condo act as renters and look upon the board as the landlord," says Mona Shyman, vice president of the Federation of New York Housing Cooperatives & Condominiums (FNYHC) and a consultant on co-ops and condos. "They think everything is going to be taken care of for them. It doesn't matter if you're in a co-op or a condo. There are interested people and there are not-interested people."
Another reason people don't attend is that they're frustrated with an overbearing board. They might think their opinion doesn't matter because the people in charge of running their building aren't about to take other points of view into account when making decisions.
In this case, the reasons for not attending might be less apathy and more, "I can't make a difference, even if I tried."
"With a dictatorial board that never listens to the shareholders, the experience can be quite frustrating," says Brucker.
Benefits of Attending
The biggest benefit for a shareholder who attends meetings is simple: it's one of the best ways to protect your investment.
"The purchase of an apartment is the biggest investment most people will ever make," Brucker points out. "Keeping an eye on their investment just simply makes common sense."
Jain agrees wholeheartedly. "I tell people: 'If you have $10,000 with Charles Schwab, you look at your account ten times a week. But you have $300,000 [invested] in your co-op and you don't even come once a year to an annual meeting,'" he argues. "How is this protecting your investment?"
Perhaps the most significant benefit is you know what's happening with your building—and you're able to have a say, too.
"The shareholder meeting is generally an informative meeting," says Shyman. "You find out what your co-op is doing. You can learn about the new roof or the new boiler or the new mailboxes. You can learn about the new rules and regulations that the city may pass down. And you can give your opinion."
Jain points out that those who attend have the opportunity to learn what's going on financially. You'd also hear about what's happening with respect to construction, repairs or upcoming capital improvements, he says.
He also reminds people that the co-op's attorney and accountant often attend the meeting, as well, and are open to any questions shareholders might have for them. Shareholders can also ask board members anything they'd like to know.
"They can give their opinion on something they think is wrong or not being handled correctly," maintains Jain, who says that, in his experience, meeting attendance is often only 20-30 percent of a building's shareholders and is only getting worse. "This is a direct interaction between the shareholders, the professionals that work for the corporation and the board members. By attending, you learn a lot. I have never missed a meeting at any of the co-ops I've been involved in."
Another huge reason for attendance is that most buildings hold their election at the annual meeting. If you want to vote on who sits in the board seats, you have to be present.
Sometimes a heated election will bring people out.
"If there's a lot of talk about the election and a lot of literature, it excites people a little bit," says Jain. "They'll show up to make sure their candidate gets elected."
If 50 percent of shareholders aren't in attendance at the annual meeting, however, you don't have enough votes to fill a quorum and the election cannot be held. This means board members and active shareholders have to go door-to-door to get proxy votes from other shareholders to conduct the election.
Those in charge of boosting attendance at the annual shareholder meeting know how difficult it is to encourage people to come. In addition to touting the benefits of attendance, there are other ways to draw people to the meetings.
"There's still a feeling that there's a landlord sitting somewhere and that as long as they pay their maintenance check, everything is taken care of," Jain explains. "Shareholders don't realize they are owners in a corporation and shareholders in a corporation. And that they have to participate like you would participate in any corporation."
One clever albeit not-so-new idea is to offer food. "Some people cannot pass up a meal," says Brucker.
Brucker says that one of the co-ops he represents also has an auction of a prize at each annual shareholder meeting, while another one gives away small prizes to about ten shareholder attendees.
Jain once tried offering a raffle to win one month of free maintenance to entice people to come to his co-op's annual shareholder meeting. He won't ever try this again, however, claiming that "once you start bribing people, they want money for everything."
"We've tried different things over the years, like offering drinks and cookies. People showed up, had the drink, ate the cookies and left," he adds, laughing. "We've tried to put something important on the agenda to bring people out."
"The best way to get people to come is to have something go out that says there's going to be an increase in maintenance," advises Shyman, who lives in a 300-unit co-op in Bayside. "The only way I find to get people to come to shareholder meetings is if something big is happening—and mainly to do with money."
"Pocketbook issues are probably the most important," Jain agrees. "Nobody wants an increase."
Once a month, Shyman and her board hold what they call a "Buzz Meeting." Shareholders are invited to come and air their grievances without having to speak to the manager.
Another great way to get people to come to the meetings is to encourage participation in your building's committees. People can get involved based on their expertise and belonging to committees dealing with major improvements, social events, finance, general maintenance or insurance.
In this way, people will feel more comfortable about meeting attendance since they are already immersed in the affairs of the building.
"If you have committees during the course of the year and make sure those committees are active, you'll have a better turnout for your annual meeting," says Shyman, who calls herself a firm believer in committees. "And they'll bring their friends and neighbors."
Domini Hedderman is a freelance writer and an aspiring novelist living in Erie, Pennsylvania.