Create a Productive Annual Meeting

Create a Productive Annual Meeting

One of the most challenging tasks in a family business or close partnership is to have a productive annual meeting. The comfort of informal and one-to-one discussions provides a normality that makes it awkward to have a formal meeting. therefore it is common for an annual meeting to become nothing more than a brief gathering to generate a memorialized event for the sake of official records (with the meeting sometimes minimal and the minutes frequently forgotten.) While such token efforts may meet the requirements of the incorporation or partnership agreements, such a nominal meeting fails to take advantage of a tremendous opportunity to address inevitable realities.

The annual meeting should be a tool for establishing a foundation to provide for smooth future transitions among family members, partners and owners. Discussions of stock transfers, stock redemptions and bonuses are best managed in an established process that provides a focus on the end result and key factors, as opposed to the analysis of any individual’s personal motives. To have such discussions on an annual basis keeps the topics in front of everyone without the need for a “triggering event” to necessitate such discussion under emotionally charged, difficult and/or time critical situations.

A portion of every annual meeting should be designated toward tackling key corporate planning issues in a disciplined manner without taking on the feeling of an annual meeting of a Fortune 500 company.

In addition to the required corporate checklist items (such as bonuses, distributions, election of officers, etc.) include the following processes and items for a productive and beneficial annual meeting. Be sure to keep the overall meeting in tune with the culture of the business, family and partners.


The meeting must have an established structure in order to achieve what needs to be covered in an effective manner. Elements of necessary structure  include:
A) Proper notice
B)  Appropriate location (offsite is best)
C)  Routine agenda

Attendance and Facilitation:

All stockholders should be in attendance as the focus is on corporate issues. Key business advisors can also be of benefit if they are trusted and impartial. It may also make sense to have the company accountant present the financial summary, valuation process and redemption impact. An attorney may be beneficial to guide discussions on redemption options. Because the involvement of all owners is important, a consultant or specialist in family/closely held businesses may be best suited to facilitate the meeting. This professional should be knowledgeable with the history of the company, the players and key issues; however, this resource must also be objective.

It is best to get as many participants as possible to have a voice early in the meeting. Operational summaries and financial reports are good ways to establish this objective.


There are three key aspects of ownership transition that should be reviewed.

A) Valuation: The current method/process that is in place to value the stock of the company should be reviewed. Both the process and resulting stock
values per individual should be shared.
B) Voluntary redemption: The procedures and valuation for voluntary stock redemptions should be reviewed and acknowledged by all.
C) Redemption due to death: The valuation and redemption process should be covered and a table clearly showing what the result would be for each.
shareholder provided. Any insurance in place to cover redemptions should be reviewed, including value and restrictions on benefits.

The financial and operational impact on any redemption on the corporation should also be reviewed, including the financial impact of multiple redemptions over a short period of time.

Family Members/Partner Performance:

In addition to the corporate financial picture, performance of non-owner family/future partners should be discussed with everyone present. Plans for their future inclusion into the ownership ranks should also be discussed, as well as what information should be currently shared with them.

While frequently viewed as a necessary evil, the annual meeting can be an important and effective tool in securing the long term viability of a company and minimizing future conflict among owners. By establishing a routine process that reviews transition possibilities on a regular basis, the relevant information will be established and available when needed. This discipline allows the company to manage the transition challenge at hand in a systematic manner and minimize the emotional elements from impacting the result.

Stan Diver , February 2010
Diver & Associates, LLC


The information offered provides general education and information and is not intended as tax, financial, or legal advice.