AOL's Annual Meeting
A First-timer Shares the Experience
Part 1

By Selena Maranjian (TMF Selena)

(November 4, 1999) -- If you're anything like I was just a few days ago, you've never been to a shareholder meeting. You're probably curious about how they work, what goes on, and whether you should get to one yourself. Those had long been my own questions, until now. You see, I recently attended the annual shareholder meeting for America Online. Let me tell you all about it.

I went with my colleague, Mona Sharma. Despite our best efforts to beat traffic, we couldn't. After all, the Washington, D.C. metropolitan area has notoriously heavy traffic, and the meeting, to be held some 40 miles from Fool HQ, was scheduled to begin at 10:00 a.m. We got there a few minutes after 10:00 a.m. (Phew!) Now, I had been to the meeting site, a fancy hotel/conference center, once before and had parked successfully. But this time, every side of every driveway throughout the complex had long lines of cars parked on it. The lots were full. We parked out on the main street leading to the complex. Clearly, this wasn't going to be a matter of a few dozen people in a small room.

In the lobby were "registration" tables. Registration just meant signing in on a clipboard, which asked for your name, your address, and the number of shares you own. Some people didn't disclose the number of shares. The person who signed in before me owned just 10 shares. (Anyone out there thinking that you're not a significant enough shareholder to attend, stop thinking that!) Next to the sign-in sheet were ballots. If you hadn't already voted (by sending in your proxy materials or by voting online), you could do so at the meeting. I later learned that you could even revote at the meeting; using a ballot and signing it nullifies any proxy materials you sent in previously.

We left the registration table and headed toward the big ballroom that had been set up for the meeting. To the left was a complimentary breakfast. To the right, piles of annual reports, AOL 5.0 diskettes, CompuServe diskettes, magnets for helping.org (AOL's new charity portal), and copies of the little white booklets that always accompany proxy materials that you receive in the mail. We entered the ballroom. It was dark. A short inspirational video was being shown on a large screen, featuring CEO Steve Case discussing the promise of AOL.

The video ended. The lights went up. The room was packed. Hotel staff members were bringing in more chairs. I'm not a good guesser of attendance, but I'd say there were between 500 and 1,000 people there. Some were in business suits (this was a Thursday morning, after all), and others, like us, in jeans. There were many women as well as men. The set-up was simple -- a raised platform at the front, with a podium. Six signs were hung around the room, up high. Each featured an AOL brand: Netscape, AOL.com, icq, CompuServe, digitalcity, MovieFone. Soon Steve Case himself was at the podium, calling the meeting to order.

He welcomed everyone and pointed out that sitting up front was a delegation of the "AOL Faithful" who had met online and were meeting each other for the first time at this event. Apparently, the group featured people from Hawaii, Oregon, Texas, and elsewhere. Case then proceeded to introduce the board of directors. Present were Jim Barksdale (of Netscape fame), Frank Caufield (of Kleiner Perkins Caufield & Byers venture capital fame), General Alexander Haig, General Colin Powell, and Bob Pittman (AOL's president and chief operating officer), among others. One of the items of business was electing more board members, and Case wondered whether Pat Buchanan might be bucking for the position.

The Voting

It was announced that the holders of 86% of all outstanding shares were present, either in person or by proxy. The next order of business was to go through the five proposals to be voted on:

  1. To elect three members to the board of directors.
  2. To increase the authorized number of shares of common stock from 1.8 billion to 6.0 billion.
  3. To approve the company's 1999 Stock Plan.
  4. To approve the company's Executive Incentive Plan.
  5. To ratify the appointment of Ernst & Young LLP as the company's auditors.
As each item was announced, there was time for discussion and questions. No one discussed or asked any questions, though. The polls were declared open, and people with ballots were asked to pass them to the ushers rushing around.

At this point, the formal reason for the meeting had passed. But it had not even been 30 minutes. Steve Case explained that since so many people came from far away, he didn't want to shortchange anyone. So he would discuss the company for a while, as would Bob Pittman, and then they'd field questions.

Steve Case's Discussion

Here's what I could jot down as Case talked; it's the essence of much of his speech. (A lot of it appears in this year's annual report.)
  • AOL's industry accounts for 2.3 million jobs.
  • AOL is leading this technological revolution with its brands.
  • Revenues are up, advertising income is up, subscribers have passed the 19 million mark, CompuServe has surpassed 2 million members.
  • AOL has emerged as the blue chip company on the Internet, poised to end the year as one of the best-performing stocks of the decade.
  • Consumers are demanding more features. AOL 5.0 offers many, including expanded screen names, calendars, "You've Got Pictures," etc.
  • CompuServe is positioned as the value brand.
  • icq has 38 million registrants.
  • digitalcity has more than 5 million unique visitors per month.
  • In fiscal 1999, some 50 agreements were signed worth more than $1 million each.
  • The Sun-Netscape alliance, "iPlanet," is serving more than half of the companies on the Fortune 100, and some 300 companies total.
  • AOL TV will be launched in the coming year.
  • AOL is making progress in broadband, so that AOL will be accessible in more ways.
  • AOL is taking advantage of new global opportunities, with more than 3 million subscribers outside the U.S.
  • AOL Hong Kong launched a few weeks ago, and AOL Latin America is set to launch soon.
  • The medium should serve the public interest, safeguarding children, ensuring fair tax treatment for online purchases, etc.
  • The AOL Foundation has recently created helping.org, a new charity/volunteering portal. AOL wants to make philanthropy as popular as e-mail.
  • The AOL Foundation is helping bridge the digital divide between the haves and the have-nots.
  • AOL has never been in a better operational, financial, and strategic position.

Next -- Bob Pittman's Remarks, the Q&A Session, and Selena's Final Thoughts

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