Online shareholder meetings: corporate law anomalies or the future of governance

I. INTRODUCTION

(1) Whether they are reluctant to spend the time and money to travel to the meetings, or they believe that their presence is unlikely to impact the proceedings, the reasons for shareholders’ lack of participation are debatable. (2) Large individual shareholders and institutional investors thus tend to comprise most of the audience at annual shareholder meetings. (3)

In 2000, Delaware changed its shareholder meeting statute to permit corporations to hold their annual meetings solely on the Internet. This Note analyzes the amended statute, the current technical feasibility of online shareholder meetings, and their future viability.

Part II of this Note discusses the background corporate theory behind the shareholder/director relationship and shareholder meetings in general

II. BACKGROUND CORPORATE THEORY

A. The Shareholder/Director Dichotomy and Shareholders’ Rights

The corporate form embodies a dichotomy between shareholders and directors. (4) Shareholders, the providers of money capital, (5) own the corporation. (6) Yet, despite their ownership interest, shareholders elect a board of directors to oversee their investment. (7) This division between financers and managers works well because it “creates an investment vehicle for raising large amounts of capital and operating large enterprises.” (8)

Shareholders’ rights are contractual in nature

B. Shareholder Meetings

Shareholder meetings generally are held for “business [that] requir[es] the action or consent of the shareholders.” (12) Both state law and corporate bylaws dictate their location. (13) The two types of shareholder meetings are annual meetings and special meetings. (14)

State law usually requires that corporations hold annual shareholder meetings. (15) Corporate bylaws dictate the time for annual meetings, which often occur in the spring. (16) The most important item on an agenda is often the election of directors, but other activities are permitted as well. (17) For instance, reports may be read, corporate matters may be discussed, and resolutions may be introduced. (18) Also, bylaws occasionally are amended or repealed. (19)

Special meetings, on the other hand, are conducted at any time between annual meetings. (20) They may only be called for “appropriate purposes.” (21) Furthermore, the corporation must adhere to its agenda, unless the voting shareholders and proxy holders consent otherwise. (22)

Shareholder meetings are invalid unless attended by a required number of people. (23) This requisite number, known as a quorum, is “regulated by statute, charter, or bylaws….” (24) Unless a provision provides otherwise, both shareholders and non-shareholders may be counted for purposes of establishing a quorum. (25)

Generally, “only those who have the right to vote have the right to be present at [shareholder] meeting[s].” (26) However, shareholders can vote to allow non-shareholders to attend. (27)

III. THE DELAWARE STOCKHOLDER MEETING STATUTE

Prior to its 2000 amendment, Delaware’s shareholder meeting statute provided that meetings “may be held at such place, either within or without this State, as may be designated by or in the manner provided in the bylaws or, if not so designated, at the registered office of the corporation in this State.” (28) Therefore, although corporations could hold meetings in any state, they were required do so at a “place.” The statute does not define this term, but presumably the legislature used “place” in the traditional sense of the word, meaning a physical location. The Internet thus did not qualify as such a place.

The new stockholder meeting statute retains the old statutory language that permitted corporations to conduct meetings in any state. (29) Immediately following that text, however, the provision states:

If, pursuant to this paragraph or the certificate of
incorporation or the bylaws of the corporation, the
board of directors is authorized to determine the
place of a meeting of stockholders, the board of
directors may, in its sole discretion, determine that
the meeting shall not be held at any place, but may
instead be held solely by means of remote
communication…. (30)

Hence, the Delaware legislature no longer requires that corporations hold shareholder meetings in a physical location, but now allows them to occur entirely on the Internet.

As a means to maintain parity between online shareholder meetings and their non-virtual counterparts, the statute provides that shareholders and proxyholders, through remote communication, may “[p]articipate in … meeting[s] of stockholders.” (31) They may “[b]e deemed present in person and vote” as well. (32) Online “attendees” retain these rights, regardless of “whether such meeting[s] [are] to be held at … designated place[s] or solely by means of remote communication.” (33) Thus, Internet participants count towards the quorum requirement and can vote just as if they attended the meetings in person.

Finally, the statute establishes certain requirements for online shareholder meetings to protect their integrity. First, corporations must “implement reasonable measures” to ensure that individuals “deemed present and permitted to vote at the meeting by means of remote communication” are actually stockholders or proxyholders. (34) This provision ensures compliance with the traditional requirement that restricts participation in shareholder meetings to stockholders and proxyholders, absent a vote to the contrary by the stockholders in attendance. (35)

The statute also requires corporations to take reasonable steps to ensure that those who attend online meetings have “a reasonable opportunity to participate” and to vote. (36) To that effect, these shareholders must have “an opportunity to read or hear the proceedings of the meeting[s] substantially concurrently with such proceedings….” (37) Corporations, therefore, must give online attendees the chance to follow the meetings in real-time.

Finally, the statute imposes a duty on corporations to keep records of shareholders’ and proxyholders’ votes and actions at meetings taking place through remote communication. (38) This requirement prevents shareholders from perpetrating a fraud on the corporation by either voting when they do not have the right to do so, or by submitting multiple votes. Furthermore, stockholders are assured that corporations document their actions and votes

IV. ONLINE SHAREHOLDER MEETINGS: TECHNOLOGICAL PERSPECTIVE

Delaware’s cutting-edge shareholder meeting statute can be utilized only to the extent permitted by technology. Since technology constantly evolves and is gradually assimilated into common use, corporations will be able to make better use of this statute over time. Current technology, however, provides corporations with the opportunity to capitalize on this development today.

Corporations that conduct shareholder meetings over the Internet need to afford participants the chance to follow the proceedings as they occur and to vote. (39) Therefore, to comply with the Delaware shareholder meeting statute, corporations must, among other things, provide shareholders with real-time content and the ability to transmit their votes. (40)

Participants in online stockholder meetings have numerous means to transmit votes, including email and Internet messaging. (41) Therefore, the larger issue is whether technology permits shareholders to follow online meetings in real-time.

A. Corporations’ Technological Perspective

Many factors determine the quality of broadcasts streamed over the Internet. The initial quality of the audio and video is one important consideration. (42) For instance, corporations must be mindful that the cameras and microphones they use to record meetings comprise the first link in a complicated process.

While cameras and microphones capture meetings, computers with special video cards must take the content from those cameras and microphones, compress the data, and “convert it into streamed media format.” (43) These computers are commonly known as encoders. (44)

Encoders can cost from $20,000 for modest setups (45) to millions for larger applications. (46) For example, CNET, CNN, Fox News, FoxSports.com, NFL Films, Radio Canada, weather.com, and ZDF use Anystream Inc.’s Agility Enterprise software solution (47) to encode video for their websites. (48) According to Anystream’s CEO, the Agility Enterprise application minimally costs $50,000. (49) The Agility Enterprise software requires a computer with dual Pentium three or four processors and “[d]isk drives capable of supporting eighty Mbps sustained write speed.” (50) Additional encoders may be installed “to create multiple simultaneous streams.” (51)

The encoded audio and video then must be broadcasted over the Internet. Streaming servers transmit the media “in a similar way to how a web server serves web pages.” (52) A major difference exists, however, between web servers and streaming servers. Web servers rely on “download-and-play technology,” whereby users have to download files to use them. (53) This method is akin to “pouring milk into a glass and then drinking it.” (54) In contrast, streaming servers actively send the media to users, allowing them to “play[] the audio or video while it … download[s], after only a few seconds wait for buffering….” (55) Streaming servers are more “like drinking straight from the carton”

Several companies manufacture streaming servers. Apple Computer, Inc. produces two server applications: QuickTime Streaming Server and Darwin Streaming Server. (57) Apple distributes both software packages for free

RealNetworks also sells a server application. This application, dubbed Helix Universal Server, is available in two formats. (63) The entry-level version, which starts at $1,999, is geared towards “small organizations or … limited audiences.” (64) The enterprise version is more robust than the standard version, offering “live and on-demand content across diverse network environments.” (65) It starts at $5,879, and can “reach[] 10,000 simultaneous users on a single … server.” (66) Both software packages run on standard server hardware, including computers running Windows NT 4.0, Windows 2000, Windows XP Professional, Linux, gLibC, and FreeBSD. (67)

Finally, Microsoft’s streaming media server is built into its Windows Server 2000 product. (68) This server is capable of serving from 2,400 to 9,000 continuous streams from a single server, depending on the bandwidth of the users downloading the streams. (69) Microsoft charges $999 for a five-client license to the server and $1,199 for a ten-client license. (70)

Corporations’ networks and bandwidth (71) affect the number of shareholders they can reach online. (72) For instance, unicast streaming, the most common method for streaming media, requires “streaming server[s] [to] establish[] … separate unicast stream[s] for each client requesting access to the media.” (73) If corporations use this method, they have to allocate bandwidth to each shareholder. (74) As more people attempt to access unicast streams, corporations might have trouble keeping pace with bandwidth requirements. (75) Large webcasts can overload corporations’ servers and network connections, resulting in “[u]nintended denial-of-service attacks.” (76)

Multicast streaming provides a lower bandwidth option to unicast streaming. (77) Corporations that employ multicast streaming transmit “a single real-time stream” (78) into which shareholders can “‘tune.'” (79) While this method allows for larger online audiences, it requires corporations to specially configure their networks. (80) Therefore, multicasting can result in higher costs due to network management. (81)

Also affected by corporations’ networks and bandwidth are audio and video quality. (82) To allow multiple people to access online content, encoders must compress the media. (83) The greater the compression, the smaller the media file. (84) Thus, when compression is increased, individuals are required to download less material. (85) Unfortunately, audio and video quality decreases with greater compression. (86)

Therefore, corporations’ networks and bandwidth must be scaled according to the size of their audiences and the audio and video quality that they wish to broadcast. A good quality video broadcast with audio can “saturate 10-Mbps shared connections” and interfere with other network activity. (87) 100-Mbps connections therefore are recommended for the best quality video and audio webcasts. (88) These connections cost at least $1,000 a month. (89)

While all of these factors might seem daunting, especially to entities currently without the infrastructure to support streaming media, corporations can outsource the technological responsibilities associated with online shareholder meetings. Given technological advances and an increased demand for online presentations, firms now specialize in providing webcasting solutions to corporations. For instance, Shareholder.com is a company that specializes in “investor relations communications.” (90)

Shareholder.com offers several different webcasting (91) options. (92) For example, Shareholder.com will archive online annual shareholder meetings for as little as $3,450. (93) This fee covers access to “speaker biographies, meeting agenda[s], and accompanying newsreleases or announcements while [shareholders] watch [the events].” (94) It also includes a transcription of the meeting, which “allow[s] shareholders to fast-forward to relevant keywords and topics.” (95) More importantly, Shareholder.com broadcasts meetings live starting at $12,000. (96) During the simulcast, Shareholder.com provides “real-time audience reporting” and allows shareholders to “submit questions that can be answered by presenters.” (97) Therefore, if corporations do not want to invest in cameras and microphones, encoders, streaming servers, and a heavy-duty Internet connection, they can pay a specialist to assemble the requisite technological infrastructure for online shareholder meetings.

B. Shareholders’ Technological Perspective

In addition to determining their own hardware and Internet capabilities, corporations must evaluate the systems and connections their shareholders will use to access the meetings online. Corporations generally are in a better position than ordinary home computer users to prepare for online shareholder meetings because they have the financial capability to upgrade their systems or to outsource the job to another company. In contrast, ordinary computer users likely will not upgrade their systems if they are unable to access online meetings. Corporations therefore must consider whether a sufficient number of investors will participate to make the investment in online shareholder meetings worthwhile. In making this assessment, they should request information about shareholders’ computers and their Internet connections. (98)

The most popular streaming formats are Apple Quicktime, RealNetworks media, and Microsoft Windows Media. (99) RealNetworks’ RealPlayer 8 requires shareholders to have minimally a “120 Mhz Intel Pentium processor or equivalent” with “16 MB of RAM,” or a Macintosh computer with a “604 PowerPC processor (200 Mhz or better)” running “Mac OS 8.1 or later” with “32 MB RAM,” along with a “28.8Kbps modem.” (100) Windows Media Player (101) and Apple QuickTime (102) cite similar minimum system requirements.

These minimum system requirements should not prohibit shareholders from participating in online meetings. Computers with the above specifications were built starting in the early to middle 1990s. (103) Thus, if shareholders purchased their computers within the last decade, they should be able to attend Internet meetings.

While the above requirements represent the minimum system shareholders must have to attend online meetings, they will enjoy more meaningful online meeting experiences if they possess newer systems. For instance, RealNetworks sets its “recommended computer” as one with a “200 MHz Intel Pentium processor or better” with “32MB or more of RAM” or a “G3 233 [Mhz](or faster) PowerPC” with “64MB RAM or more” and a “56.6Kbps or better modem.” (104)

Shareholders’ Internet connections will determine the quality and type of content they can receive. (105) If shareholders wish to receive only audio, they need 28.8 Kbps modems. (106) 56Kbps modems allow for “low quality video and … moderately decent audio.” (107)

As is the case with the minimum system requirements, the modem requirement will not pose a problem for the average computer user. Today, “a 56K[bps] V.90 modem is standard fare on nearly every new PC….” (108)

Broadband connections, such as cable, (109) DSL, (110) fixed wireless, (111) and satellite (112) provide much higher quality video and audio reception than that supplied by modems. (113) In other words, because shareholders’ Internet connections determine the amount of real-time data that can be downloaded, shareholders with slower connections might be able to only download audio or only watch video in a small window or they might be faced with choppy audio and video. Additionally, it might take a long time to connect to the stream with a slower connection. (114)

Fortunately, use of broadband connections is on the rise. (115) In November 2001, more than 21 million people used broadband Internet connections from home, “a ninety percent jump from … 2000.” (116) This means that, at that time, “one in five people online at home [had] a broadband connection.” (117) Therefore, the limitations posed by stockholders’ Internet connections slowly will disappear as more people upgrade to broadband.

V. CURRENT UTILIZATION OF ONLINE SHAREHOLDER MEETINGS

While companies might find the technology involved in webcasting annual shareholder meetings intimidating, several Delaware corporations have used the Internet for these events. Evidence thus exists contrary to the belief that no corporation has held its stockholder meetings online. (118)

For instance, the Bell & Howell Company (119) broadcasted its annual shareholder meeting in 1996 on the Internet. (120) The company accommodated 230 individuals listening to the meeting online. (121) Furthermore, fifteen people submitted questions via e-mail. (122) The CEO “grabbed the e-mail queries from a printer and read them to shareholders.” (123) He then typed the answers on the Internet. (124) Because many people did not have Internet access in 1996, the company offered its shareholders “free software and provided [thirty] days of connection time for … [five dollars].” (125) The meeting was later archived and made available online. (126) According to a company spokesperson, the meeting cost between $10,000 and $15,000. (127) This estimate includes the fee it paid to AudioNet, which managed the event, as well as “outside costs such as microphones and the computer and modem links, and getting some help from [its] PR firm.” (128) Therefore, for a relatively low price, Bell & Howell realized the Delaware Legislature’s dream four years before the 2000 amendment.

In April 2001, Inforte Corporation (129) held its annual shareholder meeting entirely online. (130) In a statement to shareholders, Inforte’s Chairman and Chief Executive Officer remarked:

You may notice that this meeting is unique
compared to other public companies, since it will
be held entirely on an electronic basis. Technology
allows us all to communicate and collaborate in
real time-in every functional area of business.
Since Inforte’s business is providing advanced
technology consulting, we will practice what we
preach and rely on web cast and e-mail services to
communicate with you today. (131)

The registration page of Inforte’s online stockholder meeting gave attendees a place “to ask questions prior to the meeting.” (132) Furthermore, the company allowed both shareholders and nonshareholders to email questions during the meeting. (133) The company answered all inquiries it received. (134) In addition to listening to live audio, attendees also viewed a number of PowerPoint slides. (135) The 2001 event worked well enough that, in April 2002, the corporation again used the Internet for its shareholder meeting. (136)

Finally, in 2002, Ciber Inc. (137) held its annual shareholder meeting online. (138) Ciber’s CEO, complained that “‘never … more than 10 people who were not either employees or accounting or legal advisors” attended the corporation’s physical meetings. (139) Therefore, using its in-house meeting site, the corporation endeavored to involve more of its “28,000-plus widespread shareholders.” (140)

VI. THE MASSACHUSETTS SHAREHOLDER MEETING BILL

Despite the technical feasibility of Internet-only meetings, other states have been reluctant to change their stockholder meetings statutes. In 2001, the Massachusetts Legislature introduced a bill that was based on the Delaware statute. The proposed legislation authorized corporations incorporated in that state to hold online shareholder meetings. (141) The Legislature, however, never enacted the bill. (142) Senator David P. Magnani, a Democrat and Chairman of the Science and Technology Committee, claimed that “the measure would simply give companies the option of online meetings.” (143) The bill provided corporations with a new communications tool, but “[i]f enough shareholders want[ed] to keep the traditional in-person meetings, they [could] vote on a motion to that effect.” (144)

Several Massachusetts corporations backed the bill. (145) These corporations believed that “the measure would increase participation in the meetings, particularly among out-of-state shareholders.” (146) Furthermore, they “envision[ed] cyberspace events where shareholders, armed with passwords, [would] enter a secure Website at a designated time. There they could listen to a CEO’s address via the Web, vote on proxy issues, make motions, and take part in question-and-answer sessions with company executives.” (147) Among the supporters was EMC Corporation, (148) which claimed that “the online events would be more engaging than the traditional ballroom or conference center gatherings.” (149) State Street Corporation, (150) Analog Devices, Inc., (151) Genzyme Corporation, (152) Associated Industries of Massachusetts, (153) and Reebok (154) were some of the other Massachusetts-based corporations that were poised to take advantage of the bill if it had become law. (155)

The bill, however, was challenged by activists who “condemn[ed] it as a backdoor effort to insulate company executives from unhappy shareholders.” (156) Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, (157) called the bill “‘as undemocratic as it gets,'” and argued that “‘[i]t … institutionalize[d] a lack of corporate accountability.'” (158) Marks is renowned as “a longtime organizer of attention-getting protests at annual meetings.” (159) According to Amy Domini, president of the Domini Social Equity Fund, (160) “‘[t]he opportunity to walk into a meeting, whether or not you are on the agenda, is a fundamental right of ownership…. To gut that fundamental right of ownership … is to give away a key right not only of activists but all owners of the corporate might of America.'” (161)

The Massachusetts Senate ultimately abandoned its efforts to pass the bill because of activists’ strong opposition. (162)

The Massachusetts Legislature’s failure to enact a statute permitting online shareholder meetings is evidence of shareholders’ resistance to the liberalization of this aspect of corporate law.

VII. CONCLUSION

Corporations that conduct their stockholder meetings online can increase shareholder involvement. Such meetings will not require shareholders to incur the significant travel and accommodation expenses associated with attending a traditional annual meeting. Regardless of their location, shareholders can take part in the proceedings simply by logging in via the Internet. Moreover, most stockholders currently possess the necessary hardware and Internet connection to attend virtual meetings. (163)

Online annual shareholder meetings, however, currently appear to be corporate law anomalies. To date, only three corporations have held their annual shareholder meetings on the Internet. Although several factors, including the expense of upgrading computer and networking equipment, can account for the scarcity of online meetings, perhaps the best explanation is negative shareholder sentiment.

Stockholders readily voice their distrust of online meetings. Such was the case in Massachusetts, where shareholder activists’ vehement protests ultimately led legislators to abandon a proposed bill that would have allowed online annual shareholder meetings. Even in Delaware, the first state in the nation to permit these proceedings, many people fear adverse effects on shareholders’ welfare. It has been said that Delaware’s shareholder meeting statute is an invitation for corporations “to ‘incorporate in Delaware and never … look [their] shareholders in the eyes again.'” (164) Because stockholders have the fundamental right to express their opinions during annual meetings, and these meetings are perhaps the only time during the year when shareholders can meet personally with managers, shareholder activists view Delaware’s statute as an impingement upon shareholders’ rights.

Perhaps shareholders are leery because they fear that online meetings pose greater opportunities for corporate abuse. When they cannot meet face-to-face with directors, stockholders might worry that managers will take advantage of them. Corporate officers can ignore e-mails or instant messages more easily than they can avoid answering the questions of in-person attendees. Many stockholders thus deem Internet meetings inferior to traditional ones because no form of remote communication is so effective that it can substitute for in-person participation.

Directors must consider the views of those who have entrusted them with the power to run the corporation. It seems as if many do just that when they decide whether to hold annual shareholder meetings over the Internet. Given the prevalence of stockholder hostility towards such proceedings, online shareholder meetings will likely remain a corporate anomaly for years to come.

(1.) Louis Corrigan, Annual Shareholder Meetings Go Online, THE MOTLEY FOOL (Aug. 22, 1997), at http:// www. fool. com/ Rogue/ 1997/ Rogue970822.htm (last visited May 24, 2003) (on file with the Rutgers Computer Technology & Law Journal).

(2.) Id.

(3.) Id.

(4.) See Henry Hansmann & Reinier Kraakman, The Essential Role of Organizational Law, 110 YALE L.J. 387, 392 (2000).

(5.) Solomon, Lewis D. & Alan R. Palmiter, Corporations: Examples & Explanations [section] 1.1.1 (3d ed. 1999).

(6.) Hansmann & Kraakman, supra note 4, at 392.

(7.) Solomon & Palmiter, supra note 5, [section] 1.1.1. See also Hansmann & Kraakman, supra note 4, at 392.

(8.) Solomon & Palmiter, supra note 5, [section] 1.1.2.

(9.) 18A AM. JUR. 2D Corporations [section] 741 (1985).

(10.) Id. (citing Greater Iowa Corp. v. McLendon, 378 F.2d 783, 796 (8th Cir. 1967)

(11.) For a discussion of delivering proxy materials and proxy voting over the Internet, see George Ponds Kobler, Comment, Shareholder Voting Over the Internet: A Proposal for Increasing Shareholder Participation in Corporate Governance, 49 ALA. L. REV. 673 (1998).

(12.) 18A AM. JUR. 2D, supra note 9, [section] 948.

(13.) 1 ENCYCLOPEDIA OF CORPORATE MEETINGS, MINUTES, AND RESOLUTIONS 5 (3d ed. 1986).

(14.) Harry G. Henn, LAW OF CORPORATIONS 370 (2d ed. 1970).

(15.) Id. See N.J. STAT. ANN. [section] 14A:5-2 (West 1969)

(16.) Henn, supra note 14, at 370-71. Annual shareholder meetings take place most commonly in April and May. The date is set “to allow time for the preparation of the financial audit and annual report between the end of the fiscal year and such meeting.” Id. at 371 n.6.

(17.) Id. at 371.

(18.) Id.

(19.) Id.

(20.) Id.

(21.) Id. Appropriate purposes include electing new directors, removing current directors, and amending the bylaws to increase the number of people on the board of directors and to alter quorum requirements. Campbell v. Loews Inc., 134 A.2d 852, 855-60 (Del. Ch. 1957)

(22.) 1 ENCYCLOPEDIA OF CORPORATE MEETINGS, MINUTES, AND RESOLUTIONS, supra note 13, at 4.

(23.) Id. at 16.

(24.) Id. at 15.

(25.) Henry Winthrop Ballantine, Ballantine on Corporations 395 (1946).

(26.) 1 ENCYCLOPEDIA OF CORPORATE MEETINGS, MINUTES, AND RESOLUTIONS, supra note 13, at 17.(27.) Id.

(28.) DEL. CODE ANN. tit. 8 [section] 211(a) (1999).

(29.) DEL. CODE ANN. tit. 8 [section] 211(a)(1) (2002).

(30.) Id. (emphasis added).

(31.) DEL. CODE ANN. tit. 8 [section] 211(a)(2)(a) (2002)

(32.) Id.

(33.) Id.

(34.) DEL. CODE ANN. tit. 8 [section] 211(a)(2)(b)(i) (2002).

(35.) See 1 ENCYCLOPEDIA OF CORPORATE MEETINGS, MINUTES, AND RESOLUTIONS, supra note 13, at 17.

(36.) DEL. CODE ANN. tit. 8 [section] 211(a)(2)(b)(ii) (2002).

(37.) Id.

(38.) DEL. CODE ANN. tit. 8 [section] 211(a)(2)(b)(iii) (2002).

(39.) DEL. CODE ANN. tit. 8 [section] 211(a)(2)(b)(ii) (2002).

(40.) Id.

(41.) In fact, corporations that put their meetings on the Internet have used email for communication. See David Young, Web Meetings

(42.) The Joy (and Pain) of Measuring Streaming Media, ITWORLD (Dec. 4, 2000), available at http:/ /www. itworld. com/ AppDev/ 1469/ NWW1204revside4/ (last visited May 22, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(43.) STEVE CRESSWELL, WHITE PAPER–STREAMING MEDIA TECHNOLOGY, available at http:// itworld.bitpipe.com/data/detail?id=990610295_136&type=RES&x=1686098595 (last visited May 22, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(44.) Id.

(45.) See John Townley, Streaming From The Left, available at http://smw.internet.com/video/reviews/cdnshow/index4.html (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(46.) See John Townley, Streaming From The Left, at http://smw.internet.com/video/reviews/cdnshow/index4.html (last visited Jan. 30, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(47.) Anystream Sample Customer List, available at http://www.anystream.com/customer_list.asp (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(48.) David Lewis, Weather.com Warms to Streaming App, at http://www.internetweek.com/netresults01/net070901-1.htm (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(49.) Id.

(50.) Agility 3.0 Technical Specifications, at http://anystream.com/agility_3_tech_specs.asp (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(51.) Cresswell, supra note 43, at 4.

(52.) Id.

(53.) Web Server vs. Streaming Server, at http:// www. microsoft. com/ windows/ windowsmedia/ compare/ webservvstreamserv .aspx (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).(54.) Id.

(55.) Id. Buffering is “the process of collecting the first part of a media file before playing.” Id. The buffer “allows the media to continue playing uninterrupted even during periods of high network congestion.” Id.

(56.) Id.

(57.) Apple’s QuickTime Streaming Server, at http://www.apple.com/quicktime/products/qtss/ (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal) [hereinafter QuickTime Streaming Server].

(58.) QuickTime Streaming Server FAQ, at http:// www. apple. com/ quicktime/ products/ qtss/ qtssfaq.html (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal) [hereinafter QuickTime Streaming Server FAQ].

(59.) QuickTime Streaming Server, supra note 57.

(60.) QuickTime Streaming Server FAQ, supra note 58.

(61.) Darwin Streaming Server, at http:// developer. apple. com/ darwin /projects/ streaming/ (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(62.) Darwin Streaming Server FAQ, at http:// developer. apple. com/ darwin/ projects/ streaming/ faq.html (last visited May 24, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(63.) Helix Universal Server, at http:// www. realnetworks. com/ products/ server/ index.html (last visited May 25, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(64.) Id.

(65.) Id.

(66.) Id.

(67.) Specifications, at http:// www. realnetworks .com/ products/ server/ specifications.html (last visited May 25, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(68.) Introducing the Windows Server 2003 Family, at http:// microsoft. com /windowsserver2003/ evaluation/ overview /family.mspx (last modified Nov. 18, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(69.) ZD Labs Scalability Report, at http:// www. microsoft. com/ windows/ windowsmedia/ compare/ zdLabs. aspx (last visited May 25, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(70.) Pricing and Licensing, at http:// www. microsoft. com /windows2000/ server/ howtobuy/ pricing/ (last visited Feb. 18, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(71.) Bandwidth is “[t]he amount of data that can be sent through a network connection, measured in bits per second (bps)” or “the range of transmission frequencies a network can use, expressed as the difference between the highest and lowest frequencies of a transmission channel (in Hertz, or cycles per second).” Definition: bandwidth, COMPUTERUSER HIGH-TECH DICTIONARY, at http:// www.computeruser.com/resources/dictionary/popup_definition.php?lookup=392 (last visited Feb. 27, 2003) (on file with the Computer & Technology Law Journal).High bandwidth permits “fast transmission or high-volume transmission.” Id.

(72.) Andy Covell, Reel ‘Em In!, NETWORK COMPUTING (Feb. 19, 2001), at http:// www. networkcomputing. com/ 1204/ 1204fla1.html (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(73.) Id.

(74.) Id.

(75.) See id.

(76.) Script: Streaming Media Audio Primer, NETWORK WORLD FUSION, http:// www. nwfusion. com/ primers/ streaming/ streamingscript.html (last visited Feb. 27, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(77.) Covell, supra note 72.

(78.) Id.

(79.) Script: Streaming Media Audio Primer, supra note 76.

(80.) Covell, supra note 72.

(81.) See id.

(82.) Id.

(83.) Id.

(84.) Script: Streaming Media Audio Primer, supra note 76.

(85.) See id.

(86.) Id.

(87.) Sean Doherty, Digital Convergence–Voice and Video Will Change the Face of Corporate Communications, But Interoperability Has Been a Problem. Will It All Come Together in 2002?, NETWORK COMPUTING, Dec. 17, 2001, at 48.

(88.) Id.

(89.) Margie Semilof, Metro Ethernet Gains Momentum, INTERNETWEEK, July 30, 2001, at 21.

(90.) Shareholder. corn Enhances Annual Shareholder Meetings with Online Presentation Suite, BUS. WIRE (Feb. 12, 2002). Shareholder.com provides its 750 international clients with “complete and integrated broadcasts and delivery of corporate IR news and shareholder materials through … customized investor-relations websites

(91.) Webcasting is “the ability to use the Web to deliver live or delayed versions of sound or video broadcasts.” Webcast, at http:// searchnetworking. techtarget. com/ sDefinition/ 0,,sid7_gci213344,00.html (last visited Feb. 18, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(92.) Shareholder.com’s Annual Shareholder Meeting Presentation Suite, at http:// www. shareholder. com/ home/ services/ AnnualMeeting.cfm (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(93.) Id.

(94.) Shareholder.com Enhances Annual Shareholder Meetings with Online Presentation Suite, supra note 90.

(95.) Id.

(96.) Id.

(97.) Id.

(98.) See infra notes 100-102 for the minimum system requirements to experience streaming content

(99.) Covell, supra note 72.

(100.) RealPlayer 8 Basic Minimum System Requirements, at http:// forms. real. com/ real/ player /minreq.html (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(101.) See Microsoft’s Windows Media Player’s download page for precise minimum system requirements, at http:// www. microsoft. com/ windows/ windowsmedia/ download/ default.asp (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(102.) QuickTime System Requirements, at http:// www. apple. com/ quicktime/ download/ system_req.html (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(103.) Apple came out with the PowerPC processor in 1994. Glen Sanford, Company History, available at http:// www. applehistory. com/ frames/ ?&page=history&section=h5 (last visited Feb. 17, 2003) (on file with the Rutgers Computer & Technology Law Journal). Intel already had upgraded from the Pentium processor to the Pentium Pro processor in 1995. Intel Labs-History of Innovations, at http:// www. intel. com/ labs/ innovations /innovations_flash.htm (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(104.) RealPlayer 8 Plus System Requirements, at http:// www. real. com / playerplus/ sysreqs.html?src=011204realhom_mac,011204help,011204rpchoice_cl (last visited Jan. 31, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(105.) See Help Guides, at http:// www. ets. uidaho. edu/ help_docs/ streaming_media/ 2_key_factors.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(106.) Id.

(107.) Id.

(108.) Modem, CNET, at http://computers.cnet.com/hardware/0-1018-820548580-11.html (last visited Mar. 9, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(109.) A cable Internet connection is as much as 36 times faster than a 56Kbps dialup connection. Gregg Keizer, CNET Compares Your High-Speed Internet Options, CNET (Oct. 2, 2001), at http://www.cnet.com/internet /0-3762-8-72876802.html?tag=st.is.3762-8-7287680-1.txt.3762-8-7287680-2 (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). To use this method of accessing the Internet, a cable modem must be connected to a cable television line. Id.

(110.) A DSL connection ranges between 5 and 28 times faster than a 56Kbps dialup connection. Keizer, supra note 109, at http://www.cnet.com/internet /03762-8-7287680-3.html?tag=st.is.3762-8-7287680-2.arrow.3762-8-7287680-3 (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). While DSL utilizes users’ telephone connections, availability of DSL service is far less than cable service, and often costs more than cable. Id.

(111.) Fixed wireless connections rely on rooftop antennas to transmit data to and receive data from towers connected to the Internet. Keizer, supra note 109, at http://www.cnet.com/internet /0-3762-8-7287680-4.html?tag=st.is.3762-87287680-3.arrow.3762-8-7287680-4 (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). This type of Internet connection provides speeds 18 to 36 times quicker than 56Kbps dialup connections. Id.

(112.) Satellite Internet connections work in a similar fashion to satellite television systems

(113.) University of Idaho, Streaming Media Help Guide, at http:// www. ets. uidaho. edu/ help_docs/ streaming_media/ 2_key_factors.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(114.) See generally The Joy (and Pain) Of Measuring Streaming Media, supra note 42.

(115.) Alorie Gilbert, Report: Broadband Home Use Jumps, ZDNET NEWS (Dec. 11, 2001), available at http://zdnet.com.com/2100-1106-814342.html (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). In a recent survey, 72% of dialup customers reported that they were not upgrading to broadband because of its greater cost. OFF. OF TECH. POL’Y, Understanding Broadband Demand, Sept. 23, 2002, at 14, available at http://www.ta.doc.gov/reports/TechPolicy/Broadband_020921.pdf (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). Furthermore, a number of customers “believe[d] that broadband [was] a workplace technology with little value outside the office.” Id. However, fueled by the convenience of telecommuting and the appeal of online entertainment, such as gaming and music, a growing number of people are upgrading to broadband connections. Id. at 15-16.

(116.) Gilbert, supra note 115.

(117.) Id.

(118.) See, e.g., Jessica M. Natale, Exploring Virtual Legal Presence: The Presence and the Promise, 1 J. HIGH TECH. L. 157, 171 (2002)(stating “Delaware allows a company to hold their [sic] annual meetings online, but to date no company has done so)

(119.) Bell & Howell, an Illinois-based and Delaware-registered “provider of systems and services for information access and dissemination” reported over $900 million in net sales and over 6,000 employees in 1996. Bell & Howell’s 1996 Annual Report, available at http:// www. sec. gov/ Archives/ edgar/ data/ 899596/000899596-97-000002.txt (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(120.) Young, supra note 41.

(121.) Id.

(122.) Id.

(123.) Id.

(124.) Id.

(125.) Heath Row, Lights! Camera! Web Action!, FAST COMPANY (Feb. 1998), at 199, available at http:/ /www. fastcompany. com/ online/ 13/ atwork.html (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(126.) Young, supra note 41.

(127.) Corrigan, supra note 1.

(128.) Id.

(129.) An Illinois-based and Delaware-registered corporation that dubbed itself a “[s]trategic technology consultancy.” Inforte Corp.’s 2001 Annual Report, available at http:// www. sec. gov/ Archives/ edgar/ data/ 1099944/ 000094018002000632/ d10k.txt (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). The corporation assisted “clients create strategies and implement technologies that capture[d], manage[d] and integrate[d] customer and other demand information into all aspects of the value chain, enabling companies to become more demand driven and demand responsive.” Id. Its principal clients were “Global 2000 companies.” Id. The corporation reported over $47 million in revenue for fiscal year 2001, and retained 294 employees. Id.

(130.) Kamarauskas, supra note 41.

(131.) Id.

(132.) Id.

(133.) Id.

(134.) Id.

(135.) Id.

(136.) Ross Kerber, Public Firms Try Meetings Online,’ Smaller Companies Saving By Webcasting Annual Proceedings, SAN FRANCISCO CHRON., July 29, 2002, at E1.

(137.) Ciber is a Delaware corporation with its principal place of business in Greenwood Village, Colorado. Ciber Inc., Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2001 (Form 10-k), File No. 0-3488, at 1, available at http:// www. sec. gov/ Archives/ edgar/ data/ 918581/ 000091205702010165/ a2073225 z10-k.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). The company “provide[s] information technology (IT) system integration consulting and other services and to a lesser extent, resell[s] certain hardware and software products.” Id. at 3. Its client base “consist[s] primarily of Fortune 500 and middle market companies across most major industries and governmental agencies.” Id. In 2001, the corporation reported nearly $560 million in revenue and employed approximately 5,000 people. Id. at 3,11.

(138.) Kerber, supra note 136.

(139.) Janet Forgrieve, Ciber to Hold Virtual Shareholder Meeting

(141.) The bill provides, in relevant part:

If authorized by the board of directors in its sole discretion,
and subject to such guidelines and procedures as the board of
directors may adopt, stockholders and proxyholders not
physically present at an annual meeting of stockholders may,
by means of remote communication: (1) participate in an
annual meeting of stockholders
person and vote at an annual meeting of stockholders whether
such meeting is to be held at a designated place or solely by
means of remote communication ….

H.B. 4400, 182nd Gen. Ct. Reg. Sess. (Mass. 2001).

(142.) Ralph Ranalli, Corporate Meetings Bill Is Shelved-Shareholder Group Raps Online Forums, BOSTON GLOBE, Aug. 24, 2001, at B1.

(143.) Ralph Ranalli & Peter J. Howe, OK Is Near for Online Shareholder Meetings, BOSTON GLOBE, Aug. 23, 2001, at A1.

(144.) Id.

(145.) Id.

(146.) Id.

(147.) Id.

(148.) EMC is a Massachusetts corporation that “design[ed], manufacture[d], market[ed] and support[ed] a wide range of storage platforms and software offerings, as well as related services, that enable[d] [its] customers to store, manage, protect and share electronic information.” EMC Corp., Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the Fiscal Year Ended December 31, 2001 (Form 10-k), File No. 1-9853, at 1, available at http:// www. sec. gov/ Archives/ edgar/ data/ 790070/ 000092701602001573/d10k405. htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). The corporation reported over $7 billion in revenue and employed over 20,000 people worldwide in 2001. Id. at 7, 13.

(149.) Ranalli & Howe, supra note 143, at Al.

(150.) State Street Corporation is a Massachusetts “financial holding company” that maintained custody of over $6 trillion in assets and managed approximately $800 billion in assets in 2001. State Street Corp., Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the Fiscal Year Ended Deceber 31, 2001 (Form 10-k), File No. 0-5108, at 1, available at http:// www. sec. gov/ Archives/ edgar/ data/ 93751/ 000114544302000006/ d10-k.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(151.) Analog Devices, Inc. is a Massachusetts corporation that “design[ed], manufacture[d] and market[ed] … high-performance analog, mixed-signal and digital signal processing (DSP) integrated circuits (ICs) used in signal processing applications.” Analog Devices, Inc., Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the Fiscal Year Ended November 3, 2001 (Form 10-k), File No. 1-7819, at 1, available at http:// www. sec. gov/ Archives/ edgar/ data/ 6281/ 000095013502000307/ b40733ade1 0-k.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). The company reported over $2 billion in sales and employed approximately 9,000 people in 2001. Id. at 1, 12.

(152.) Genzyme Corporation is a Massachusetts “biotechnology and human healthcare company that develop[ed] innovative products and provides services for major unmet medical needs.” Genzyme Corp., Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 13, 2001 (Form 10-k), File No. 0-14680, at 6, available at http:// www. sec. gov/ Archives/ edgar/ data/ 732485/ 000091205702012898/ a2073695 z10-k.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal) [hereinafter Genzyme 10-k]. The corporation had over $1 billion in revenue in 2001. Exhibit 13.1 to Genzyme 10-k, at GCS-5, available at http:// www. sec. gov/ Archives/ edgar/ data/ 732485 /000091205702012898 / a2073695zex-13_1.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(153.) Associated Industries of Massachusetts is “the largest nonprofit, nonpartisan association of Massachusetts employers.” About Us, ASSOCIATED INDUSTRIES OF MASS., http:/ /www. aimnet. org/ coordinateone. cfm?RelativePath= /index.cfm&template=ds p_aboutus (last visited Mar. 6, 2002) (on file with the Rutgers Computer & Technology Law Journal).

(154.) Reebok is a Massachusetts corporation that “design[ed] and market[ed] … sports and fitness products, including footwear, apparel, and accessories, as well as … design[ed] and market[ed] … footwear and apparel for non-athletic, ‘casual’ use.” Reebok Int’l Ltd., Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2001 (Form 10-k), File No. 1-9340, at 1, available at http:// www. sec. gov/ Archives/ edgar/ dataJ770949/ 000091205702011726/ a2073450 z10-k405.htm (last visited Mar. 9, 2002) (on file with the Rutgers Computer & Technology Law Journal). The corporation reported close to $3 billion in sales and employed nearly 7,000 people in 2001. Id. at 2, 17.

(155.) Ranalli & Howe, supra note 143.

(156.) Id.

(157.) The Neighborhood Assistance Corporation is a provider of housing assistance for low-income families. Id.

(158.) Id.

(159.) Id.

(160.) Domini Social Equity Fund is “[t]he nation’s oldest and largest socially and environmentally screened [mutual] fund.” Domini Funds Overview, at http://www.domini.com/domini-funds/index.htm (last visited Mar. 6, 2003) (on file with the Rutgers Computer & Technology Law Journal).

(161.) Ranalli, supra note 142.

(162.) Id.

(163.) See supra Part III and accompanying footnotes.

(164.) Lawrence A. Hamermesh, Face-To-Space: Delaware Allows Annual Meetings to Take Place on the Internet Raising Questions About Shareholder Input, DEL. L. WKLY. (Dec. 26, 2000).

Daniel Adam Birnhak, J.D. Candidate, Rutgers School of Law-Newark, 2003