In Finance, what is an Annual Meeting?

An annual meeting is a gathering of a company's management team and its shareholders that is held once a year. Companies that host an annual meeting typically are publicly traded entities, which means that their shares are bought and sold in the financial markets. These gatherings are a platform for dialogue between company managers and equity holders, or stockholders. These meetings typically occur in large facilities that can accommodate big crowds and usually are held during the spring.

Company executives use the setting of an annual meeting to communicate to investors any developments that have occurred during the previous 12 months, such as updating the status of a project or of a merger integration. Also known as stockholder meetings, these gatherings address major issues that are up for debate, such as potential changes in executive leadership. Votes can occur at these gatherings for a variety of reasons, such as addressing a vacant seat on a company's board of directors that is open to be filled.

Prior to an annual meeting, a company sends out information detailing the topics that are expected to be covered at the gathering. Certain investors, including common stock shareholders, are eligible to cast votes on debatable issues based on the number of shares owned. If an investor cannot attend an annual meeting but would still like to voice an opinion, they may vote via proxy and mail their decision to the company. Mutual fund investors gain exposure to individual companies via the fund in which they are invested. In this case, voting rights rest with the investment advisers of the fund, not individual investors.

A company typically hosts an annual meeting at the same time each fiscal or economic cycle ends, which allows stockholders to plan accordingly. Investment firms such as hedge funds that own at least five percent of a company's outstanding shares receive an opportunity to speak at these stockholder meetings. Investors with more than a five percent holding in a stock also can become activist shareholders. Annual meetings can be rather exciting if activist investors, those looking to make a change to the way a business is run in an attempt to invigorate a stock price, become involved.

In the event that large stakeholders in a company are dissatisfied with events that have transpired in the previous year and with the value of a stock price, they might voice their opinions and offer suggestions for change. In some cases, these activist investors might attempt to replace members on a board of directors or the current management regime by challenging the company to a vote. This is known as shareholder activism. Ultimately, a vote by the common stockholders decides who is right.