Due to COVID-19: Daimler Annual Shareholders’ Meeting held virtually for the first time

Transfer money, submit your tax return, or even take care of your weekly shopping: Many things that people normally left the house to do ten, 15, or 20 years ago without even thinking about it can now be done online from the comfort of their living room. In some places, it’s even possible to get married via video chat. That’s not permitted for example in Germany, where a wedding is as much of a legal process as a romantic occasion and is therefore precisely regulated by the German Civil Code, section 1311 of which uncompromisingly stipulates that the parties contracting a marriage must be physically present in front of the official registrar at the same time.

So what does that have to do with Daimler’s Annual Shareholders’ Meeting? Well, consider the fact that up until recently, German laws governing annual shareholders’ meetings also required that these had, like weddings, to be “onsite events.” Still, Germany’s Stock Corporation Act already did allow digital participation to this extent: Companies were permitted to include clauses in their articles of incorporation that make it possible for shareholders to exercise their rights using electronic communication systems and without being physically present. This was meant to be more of an emergency option, however — one that can be used to supplement the physical meeting, not replace it.

Planning starts six months before the event

That’s why the Daimler Annual Shareholders’ Meeting has traditionally been staged as a major event. The Meeting has been held at Messe Berlin for years now. It attracts thousands of shareholders, shareholder representatives, and investors — not to mention analysts and media representatives. Also on hand are the organization team and the members of the Board of Management and the Supervisory Board. The primary purpose of the meeting, of course, is to ensure that the company’s shareholders can exercise their guaranteed legal rights. However, the Annual Shareholders’ Meeting also offers Daimler the opportunity to get shareholders more acquainted with the Group’s strategy and products, exchange opinions and information with shareholders, and strengthen the ties between them and their company. And then there are those tasty sausages, of course … 

This year, Daimler had sent out invitations to shareholders to attend an Annual Shareholders’ Meeting that was scheduled for April 1 at the CityCube in Berlin. Initial preparations for the meeting usually begin six months before it’s held. First, the date and location of the meeting are announced and then the organization team begins developing a basic concept for the event, which is then gradually planned in greater detail and refined as needed. Organizing an event of such scope is an extremely complex process in general. However, the situation is even more complex in the case of an Annual Shareholders’ Meeting because statutory deadlines and regulations must be fully complied with. In any case, the organizers have to consider everything from corporate law stipulations to catering, and the people who make the Annual Shareholders’ Meeting possible are therefore to be found throughout the entire company. Obviously, the Corporate Protocol and Investor Relations departments are part in the process, but Legal Affairs, Procurement, Communications, and Corporate Design are very much involved as well, just to name some.

Potential impact of the coronavirus was not obvious at the beginning

“We start addressing logistics and onsite infrastructure months before the meeting is scheduled to take place,” says Sabine Lang, an event manager at Daimler who has been involved in organizing Daimler Annual Shareholders’ Meetings for more than two decades. Lang joined Daimler in 1992. Since then, she has been working more or less exclusively on the planning and organization of events ranging from auto shows to driving presentations. The first time she helped organize the Annual Shareholders’ Meeting was in 1999, which was also the first Annual Meeting after the Daimler-Benz/Chrysler merger. More than 18,000 shareholders gathered for the event, which at that time was held in Stuttgart. Most of them sat in tents especially set up on the Cannstatter Wasen festival grounds. These tents were equipped with screens that showed a live broadcast of the meeting. Since that time, the Annual Meeting has become a recurring annual event in Lang’s life — like her birthday or Christmas. These days, the 44-year-old works in the Corporate Protocol department at Daimler AG, where she’s a project manager for the overall organization of the Annual Meeting, which she has now been involved with for half her life. It’s therefore safe to say that Lang has seen it all when it comes to the Annual Shareholders’ Meeting — or at least she had up until recently.

After all, when planning began for this year’s Meeting, no one could have imagined that a novel coronavirus pandemic would turn everything upside down in 2020. Around one month before the doors of the Messe Berlin were scheduled to open for the Daimler shareholders, the number of coronavirus cases in Europe began to rise sharply. Major events were canceled due to the virus and the danger of infection. The Geneva International Motor Show, which was scheduled to take place at the beginning of March, was one of the first events to be canceled. “Things then began to proceed at an extremely fast pace, and we were in close contact with the authorities at the time,” Lang recalls. “At the beginning of March, we still assumed we were going to be able to hold the Meeting on April 1, but that we would have to take special hygiene precautions. We had already started replanning the foot traffic routes at the venue in order to prevent the formation of long lines or the concentration of large groups of people as much as possible.”

But then public life came to an unprecedented complete standstill. In order to prevent the further spread of COVID-19, restaurants, movie theaters, concert halls, schools, etc. were forced to close in mid-March. Common sense in society was that the only way to get the virus under control was to reduce physical contact to a minimum. And thus, it soon became clear that it would not be possible to conduct the Daimler Annual Shareholders’ Meeting as planned under these conditions: No one could predict how the virus might spread in the following weeks, and with so many people coming together at a major event the risk of infection was simply too great. Stand and stage construction for the 2020 Meeting in Berlin had been scheduled to begin on Monday, March 16, 2020. But it never even came to that, as the Board of Management officially postponed the event three days before that date.

Invitations had already been sent out

And most of the preparations for April 1 had already been completed by then. For example, the process that ensures that every shareholder receives an invitation to the Annual Shareholders’ Meeting with the correct advance notice. Because everyone listed in the register of shareholders must be sent a personal invitation to the Annual Meeting either via normal mail, which is the standard procedure, or via e-mail. The Daimler register of shareholders contains more than one million entries. Sending out the invitations therefore involves a mass-mailing in the literal sense of the word.

Nadine Panzel, 43, coordinates the preparations for the Annual Shareholders’ Meeting. Panzel is a business management expert who has been working for Daimler since 1998. She works in the Investor Relations department, where she has been responsible for organizing the Annual Shareholders’ Meeting for the last one and a half years. Her first memories of the Meeting date back to her college days: “I worked as a hostess at a Daimler-Benz Annual Shareholders’ Meeting back in the mid-1990s,” she recalls with a laugh.

More than two decades later, she is now responsible for ensuring adherence to deadlines stipulated by corporate law, making sure that all activities on the day of the event comply with applicable regulations, and much more. Her job also involves managing the invitations to the event. “We published the invitation to the Annual Meeting in the German Federal Gazette on February 21, and we started sending out the personal invitations shortly after that,” says Panzel. This means that a large majority of the shareholders had already received their invitations well before the Annual Meeting was postponed on March 13.

Stock corporations must hold one general meeting each year

The cancellation of the event didn’t mark an end to things; it was more like a new beginning. That’s because a stock corporation like Daimler is required by law to hold such a shareholders’ meeting at least once a year. In other words, it is not possible to postpone the 2020 Annual Meeting for a year the way the Summer were postponed. It was also not possible to simply cancel it outright, as was done with the Oktoberfest. The press release issued on the day of the cancellation was already looking toward the future, as it contained an announcement of a possible new date for the meeting in July.

Still, no one really knew at the time whether it would be possible to hold the Annual Shareholders’ Meeting in July, or even how it would be organized if it were to be held. “We assumed right after the cancellation announcement that we would have to postpone the meeting for a few months, but that it would still be staged as physical event,” Sabine Lang recalls. However, just the mere rescheduling of such a highly complex event is a little like a game of Mikado — it’s virtually impossible to change the position of one wood stick without unintentionally moving other sticks, and sometimes the entire structure begins to wobble.

Is it possible to hold the Meeting without actually meeting?

And it continues wobbling as it became clear that the coronavirus was going to be with us for some time — and that it wouldn’t be possible to hold major events for several months at least. At the same time, as the weeks went by everyone was getting more and more used to dealing with the restrictions brought about by the pandemic. After all, certain things had to be kept going somehow, even if large groups of people couldn’t gather together in the same location due to the danger of infection. Wherever possible, people therefore began working from home, and school teachers and their students stopped meeting in classrooms and instead began holding classes online. College students and their professors did the same.

Against this backdrop, companies and government authorities began thinking about the possibility of holding annual meetings without a physical venue. Everyone understood that this would involve entering uncharted (digital) territory in a legal realm that was anything but trivial. The legislature considered the various aspects and then decided that it could be done. On March 27, the German Parliament Bundestag, in a very shortened legislative procedure, passed a law officially known as the “Law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal procedure law.” Article 2 of this law establishes a legal condition that allows stock corporations to hold their shareholders’ meetings entirely online, at least in the year 2020.

From a blank page to a virtual-event in three months

Whether it’s a major physical event or a major virtual event, regular participants usually don’t realize how much work goes into making the event a success — how much passion and blood, sweat, and tears are needed to ensure that everything goes as planned.

Sometimes there are also moments when the organizing team are confronted with the irony of fate, so to speak. Such a moment occurred on April 1: On what just happened to be the day on which the Annual Meeting would have taken place in Berlin, Daimler began planning its virtual Annual Meeting. The day before, the company had finally decided to forgo a physical Annual Meeting in 2020 due to the coronavirus pandemic. “The biggest challenge in terms of organization was plain for everyone to see — we only had three months, from the beginning of April to the beginning of July, to plan the entire meeting,” Sabine Lang recalls. Obviously, when you plan a virtual meeting you need to focus on entirely different things than you would with a physical meeting. For example, the reliability of the streaming technology used is much more important when the shareholders can’t be there in person, but are only participating online. “You don’t need stands or a stage, but a digital event nevertheless has to be put together properly,” she explains. “In addition, when we organize a physical meeting we’re able to rely on our many years of experience in this area, but with the virtual event we really did start with a blank page.”

Up to 12,000 viewers followed the virtual Annual Meeting

The organizers of the event quickly went to work and filled the proverbial blank page with many (digital) brushstrokes, despite all the adversity and uncertainties associated with the coronavirus pandemic. The organization team set the bar very high for itself. “We examined virtual events staged by other companies, of course, and we could tell which ones involved simply ‘moving’ the concept for the physical event to the Internet and which had been newly planned from the ground up,” Lang explains. “We wanted to create a format for the virtual Daimler Annual Meeting that would make it a vibrant event, even if the guests would only be attending it in front of a computer screen this time.”

Up to 12,000 viewers did sit down with their computer, tablet, or smartphone yesterday to follow the meeting. The organization team was satisfied by how in the end everything went smoothly in a technical sense. The team’s members are also confident that participants were able to see that the organizers of the digital event had aimed to accomplish more than just reproducing online the traditional program of welcoming addresses, the presentation of the Annual Report, and the general debate.

This was particularly noticeable in the exclusive view of the inner life of the new Mercedes-Benz S-Class that Ola Källenius presented during his speech: Thanks to the augmented reality technology in the Group’s own television studio, the Daimler CEO was able to interact directly with the new generation of the MBUX infotainment system. The announcement of a new product at an Annual Meeting? That’s something that had never happened at Daimler before — and certainly not with such a futuristic look to it.

Things were different for shareholders this year

So, what were the most noticeable changes for shareholders at this year’s virtual Annual Meeting? “The fact that there was no contact onsite between shareholders, the Board of Management, and the Supervisory Board made things feel very different,” says Panzel. In addition, in the time of the coronavirus pandemic, the rights to vote and to ask questions had to be converted to use digital processes. The focal point for this was the Shareholders’ Service Portal, which most Daimler shareholders were already familiar with. The original form of this e-service dates back to the DaimlerChrysler years: In the year 2000, it first became possible for shareholders to also issue voting instructions to proxies via the Internet. This was an absolute novelty in Europe at the time.

Today, 20 years later, it is also the Internet that made it possible to hold the 2020 Annual Shareholders’ Meeting at all. “The general debate, for which theoretically every shareholder can place themselves on the list of speakers and pose questions to members of the Board of Management or the Supervisory Board, was also conducted differently this year of course because of the coronavirus,” Panzel explains. “The shareholders had to submit their questions at the Shareholders’ Service Portal by Sunday evening. The portal also served as the platform for the live broadcast on the day of the meeting, and for the voting.”

As has been mentioned, the only reason that annual meetings can be held at all during the pandemic without people actually meeting has to do with an exemption enacted by the German legislature. This exemption only applies to the year 2020. However, if necessary, the government can order an extension until the end of 2021 at the most. In other words, the current legislation that allowed for the virtual meeting is only temporary. Nevertheless, it is not unlikely that the experience now being gained will influence legislation even after the coronavirus pandemic has ended.

Weeks and months characterized by social distancing, online learning or working from home have proved that many things work well even if they are only virtual – sometimes they even work better than expected. For the Annual Meetings to come Daimler will examine how forms of electronic communication may be used; the decisive point of course is that shareholders’ rights are safeguarded. At yesterday’s Annual Meeting, Daimler's shareholders actually decided on an initial step within the framework of what the German Stock Corporation Act already allows today. They had to decide whether the company’s Articles of Incorporation should be changed so that they enable shareholders to exercise their rights electronically without being physically present at the Meeting in the future, even when the COVID-19 exemption no longer applies. The shareholders approved this.