WITH ONLY FOUR DAYS TO GO before Meralco’s May 27 annual stockholders’ meeting, the people tasked with organizing this corporate ritual must be on needles and pins already.

This year’s meeting has attracted a lot of attention because of the public exchange of words between the company’s two major stockholders—the Lopez family and the government.

The media will be there in full force to cover the event. Many of the stockholders who used to ignore these meetings are expected to attend, if only for curiosity’s sake.

From my experience, I know the time, money and effort that go into the conduct of meetings that involve stockholders consisting of foreign and local financing institutions, pension plans, broker-dealers and thousands of individual shareholders.

Nothing is left to chance.

Although meant to fulfill a legal requirement, this activity is conducted with an eye on presenting a good image of the company to the public and potential investors, especially those with lots of money.

Assignments

Early on, a committee composed of middle-level executives is organized to oversee the conduct of a trouble-free stockholders’ meeting.

The agenda of the meeting is the center point of the preparations.

The program of activities usually consists of the following: Call to order, declaration of a quorum, approval of last annual meeting’s minutes, report of the president, ratification of the acts of management, appointment of external auditors and election of directors for the coming year.

The task of making—and seconding—the motions needed to go through those phases is usually given to the company’s external lawyers who will be made to seat in different parts of the room to give a semblance of spontaneity to their actions.

To make it easy for the chair (who may be sight- or hearing-challenged) to recognize them, they are asked to wear bright-colored “barong tagalog” or to raise their hand with a copy of the company’s annual report.

The lines to be delivered by these “actors or actresses” are rehearsed beforehand to make sure they do not stray from the script, or inadvertently take on the speaking parts of other lawyers.

And to enable them to quickly act out their assigned roles, the seats near the floor microphones are reserved for them.

Blocking force

Hours before the start of the meeting, some of the company’s employees and friendly stockholders are instructed to take the seats closest to the microphones.

To avoid attracting attention, the employees refrain from wearing their office uniforms and made to act like stockholders who came early to get the best seats in the audience.

The “hakot” crowd will clap when company officials speak, or heckle stockholders who ask embarrassing questions or are perceived to be hostile to management.

Also, by preempting those seats, an “unfriendly” stockholder seated elsewhere can be prevented from making timely objections to significant motions made during the proceedings.

By the time that stockholder is able to walk past the chairs blocking his way to the microphone, the motion has been seconded, submitted for voting and unanimously approved.

This strategy comes in handy if the proceedings have turned raucous and the chair wants to end the meeting. A quick “motion to adjourn” can be made, seconded and approved before any stockholder can object to the motion.

The stockholder who falls victim to this trickery can only suffer in silence because if he makes a scene, the security personnel may force him out of the room.

Finale

Barring any hitches in the script, a stockholders’ meeting can be completed in one hour’s time or less.

Most public companies have contingency measures for stockholders who may have, in past meetings, scrutinized the financial statements or asked hard questions and are expected to reprise their acts.

Weeks before the meeting, key officials of the company try to get in touch with them to find out if they have any questions about the statements or concerns about the company’s operations.

That gesture plays on the ego of the stockholder. He gets a feeling of importance. (“Wow! I must be held in high esteem by the company to deserve that call.”)

His ego properly massaged and, perhaps, his questions answered, that stockholder can be expected to be cooperative or less hostile during the meeting. And to cap the persuasive action, the stockholder will be warmly welcomed when he shows up.

But if the stockholder does not succumb to the psychological approach, the company has no choice but be ready to answer his questions on the floor. Whether or not he will be treated fairly in the meeting is a big question mark.

To the credit of some public companies, they allow their stockholders as much leeway as possible in airing their views as long as they are relevant or germane to the subject of the discussion.

Incidentally, if a stockholder feels the “blocking technique” is being applied to him, the remedy is to hang around the area near the microphone to have quick access to it.

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(For feedback, please write to rpalabrica@inquirer. com. ph.)