FOCUS REPORT

Intel’s New Moore’s Law for Shareholder Communications

Intel’s annual meeting may be scheduled for a couple of hours on May 19, but for all intents and purposes it had already begun on April 2. The company, which has enhanced its annual meeting electronic platform with added features has also expanded its duration to nearly two months of continuous interaction with shareholders leading up to and including live online participation in the meeting itself.

By taking these steps, Intel demonstrates that electronic participation can dramatically increase shareholders’ access to management beyond what can be achieved at traditional meetings. They also demonstrate how electronic communications, with such processes as posting all questions and comments for everyone to see, can assure more open and fair access than what had been possible at purely physical meetings.

Expanded shareholder questions – and answers

In its 2010 communications before and during the meeting, Intel is offering a record number of ways for shareholder participation. The pre-meeting message board uses technology that requires shareholders to enter a control number in order to vote and ask questions. Once ownership is verified, the technology assures that questions remain anonymous. At the same time, the platform displays all questions and answers for everyone to see.

Indeed, shareholder action on the pre-meeting message board has been strong. The company already had received 160 questions a week before the meeting – many times the number of questions that are typically answered at traditional meetings, including Berkshire Hathaway’s five-hour Q-and-A marathon (reviewed last week). That’s also roughly double the number of all in-person attendees Intel had in its meeting last year. And while the number of questions pouring in has exceeded the chipmaker’s expectations, Intel said it would answer all questions – those asked on the message board as well as those posed in-person or electronically at the meeting.

“We made a commitment to answering all the questions that come in,” says Peter Schuman, Intel’s manager of investor relations. “We had a lot more questions than we anticipated,” he added, noting that the company will answer all of them and is not filtering any. Of the 160 questions posted, Intel has already answered more than 25.

Many shareholders ask the same or similar questions on subjects like dividend and executive compensation, indicating broad interest. Therefore, says Schuman, the company will select several broad-interest inquiries and present them at the meeting. “We don’t try to duck some of the answers. We are upfront and center,” Schuman says.

Surveys of shareholder interests and priorities

In addition, Intel is using surveys that give shareholders additional opportunities to express their views. The results, which are posted online, also enable Intel’s management to learn which issues shareholders care about the most so it can address them in the annual meeting.

In one survey question, for example, preliminary results from more than 500 responding shareholders showed a significant majority favoring or more likely to participate in meetings electronically rather than in person. In another, the company asked shareholders what was the number one topic they wanted the company’s management to address, and an overwhelming majority of 71 percent named growth of new products and markets.

Access to business and financial information

The pre-meeting message board works hand-in-hand with another feature: shareholders’ ability to access a webcast of Intel’s investor day, held a week before the annual meeting. The webcast, of a full day’s dialogue between management and a probing audience of professional analysts and fund managers, provides shareholders with an efficient way to access an entire range of substantive financial information. Shareholders can watch any or all the segments and ask questions either on the message board or during the meeting.

Increased participation in more effective communications

Like many other companies, Intel is employing new technologies to expand and improve shareholder communication at a time when in-person attendance in annual meetings is shrinking and web participation is rising. This is happening as part of the broader trend of more personal and business activities migrating online.

Development of the communication processes demonstrated by Intel has been taking place for many years, but applications have been accelerating recently. Intel has been webcasting its annual meetings for a decade, at first enabling shareholders to simply observe the meeting. In 2008, when Intel provided a message board for investor questions, about 100 attended the in-person meeting while 100-150 listened to the webcast. And in 2009, when the company pioneered electronic online voting during the annual meeting, 85 attended in person and 216 observed online.

These increases in online participation, along with the early indications of a strong web participation in 2010, suggest that investors believe they are getting something that they were not getting from traditional meetings. Or, as Intel’s Schuman says: “We want to feel we are giving shareholders something, not taking away.”

Note: Intel Corporation is an invited leadership supporter of the Shareholder Forum’s program for Electronic Participation in Shareholder Meetings, according to the Forum’s policies applicable to public interest programs as stated in its Conditions of Participation.