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> Activist investors don't take a majority stake, just one large enough to get a board seat or two (5% is considered the minimum in the US) and make some noise.
by bhupy 6y ago
> Activist investors don't take a majority stake, just one large enough to get a board seat or two (5% is considered the minimum in the US) and make some noise.
Per-investor, yes — but multiple institutional investors can get involved with little intervention unless the founder holds at least a plurality. This is exactly why we're starting to see companies like Facebook and Uber issue class A shares. Travis Kalanick was, in theory, untouchable — he just didn't have the energy in him to fight the board after a personal tragedy.
> For that matter, Elon Musk only owns 21% of Tesla right now[1], so if 51% of the board think he's a net-negative, he could go immediately. They clearly do not.
Yes, and if he is forced to liquidate any more of his holding, he ceases to be a plurality. That's the point.
- triceratops 6y agoAnd my point is his "plurality" means fuck-all if a majority of shareholders or board members want a different CEO. Musk may have gotten the job originally because of his status as founder. He keeps his job because in the view of the shareholders and board he's doing a good job. And they could even choose to award him additional stock so he maintains his %. Now yes, because he owns 21%, there are fewer other shareholder votes to oust him than there would be if he owned 10% (still a plurality). But they could do so in theory. Also, I'll be upfront. I don't think a wealth tax is a good idea because it'll inevitably lead to people dodging taxes by putting the money into stuff like artwork or IP. And to counter that, the government will need to know every single item of value every person owns and have to create a large, intrusive bureaucracy to track all that. It sounds horrific. But I don't think a wealth tax discourages entrepreneurship or working hard, and PG's blog post is disingenuous in saying so.