week6 - Shareholder Activism Thomas H Noe Shareholder...

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Shareholder Activism Thomas H. Noe
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Shareholder Activists Def. An activist shareholder attempts to influence of compel management to adopt policies. Activism comes in different flavors Shareholder rights advocates Corporate Reformers Social/environmental activists Large stakeholder activists Relationship investors
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Rights Advocates Shareholder-rights advocate: A shareholder who promotes governance rights of shareholders without expecting any obvious personal gain Typically owns only a small stake in the firm Typically resolutions do not pass but may still influence management behavior
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Rights Advocates Example: Bill Steiner, one of the original founders of the Investors' Rights Association of America now an independent In 1999, targeted 40 companies for sale with auction resolutions for next year's proxy season.
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Corporate Reformer Aims to reform corporate behavior to increase efficiency. Some what “altruistic” in that personal stake in firm is not large enough to explain personal investment in activism
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Corporate Reformer Example: Jang Ha Sung, Korean Activist Formed Korean shareholder rights group People's Solidarity for Participatory Democracy Through court action and persuasion he as attempted to Stop social allocation of capital at Chaebols Make auditing more independent and transparent
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Social Activists Social Activists: Attempt to change behavior of firm to meet social/environmental objectives. Typically own small stake in the firm Typically propose resolutions that have little chance of passing but may influence policy indirectly.
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Social Activist Example: Friends of the Earth Involved in shareholder activism for over 15 years, and is busy co-filing resolutions and providing technical assistance to other organizations. For example: Campaign ExxonMobil, which Force ExxonMobil (XOM) to invest in clean and renewable energy Force XOM to account for its contribution to global warming and work to mitigate the global warming problem.
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Activist Blockholders Activist Blockholder: Hold a considerable number of shares before they consider pursuing activist polices Engage in activism to protect the value of their holdings Frequently force fundamental changes in management policy
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