4 ms·

> I think if this were really how a substantial part of shareholders thought It is a substantial part of how shareholders think, as individuals: the problem is

by nyssos 3y ago

> I think if this were really how a substantial part of shareholders thought It is a substantial part of how shareholders think, as individuals: the problem is that there aren't good channels for sending that message. Shareholder meetings require coordination and are open to manipulation by the C suite, and the market only lets you say "good" or "bad", not "do this" or "stop doing that".

ElevenLathe 3y ago
Shareholder capitalism is mystification: even if I and 51% (or even higher percentage) of other General Motors shareholders walked into the Renaissance Center in Detroit with signed affidavits demanding some course of action, the law is such that the management doesn't have to do it, and we can't really do anything about it. The reality is that widely-held public companies offer this deal: We (the executive class) get to do whatever we want, and you can come along for the ride or you can get off. There is no room for your input in any capacity other than as a consumer. Unions, on the other hand, can have their leaders show up and actually get a meeting. I hope activists shareholder gambits like this can move the needle in some way, maybe even build into a movement and surprise me, but the most practical way ordinary people can change corporate behavior is probably still labor organizing, as unsexy as that is.
- Sabinus 3y ago
  Can't that 51% of shareholders vote on a new board and CEO if the existing ones refuse demands?
  - ElevenLathe 3y ago
    In my limited understanding, this is only theoretically possible. It requires a proxy fight, which requires specialized lawyers and is therefore very expensive. Simply owning the shares isn't enough, you also have to have the money to exercise the legal rights they theoretically entitle you to.
    - Alpha3031 3y ago
      For some context on the costs, SEC analysis for 2017–2020 puts the median figure at $750k, and the mean is over double, $1.8 million.[1] In more recent years, the costs have only grown. Despite being theoretically possible to run one for less than $10k if you basically just provide the minimum legally required notice, in practice anything like that is very unlikely to actually succeed, and median (mean) costs have been $1.1m ($1.2m) in 2022 and $1.0m ($2.7m).[2] That's just the costs directly involved in proxy fights themselves, there are also often other things that you might like to do to improve chances of success. Of course, even with the high costs, there are notable successes, such as Exxon having a quarter of their board replaced in 2021. And union organising is not mutually exclusive, in fact, Starbucks unions are seeking three seats on the board this year. But they're notable because of how rare they are, and the difficulties will mean that it's likely to remain relatively rare. On the other hand, having the precedent set that it's even at all possible does probably make it more likely for directors to acquiesce to even non-binding resolutions. [1]: https://corpgov.law.harvard.edu/2022/05/25/the-cost-of-proxy-contests/ https://corpgov.law.harvard.edu/2022/05/25/the-cost-of-proxy... [2]: https://www.kirkland.com/publications/kirkland-manda-update/2023/06/shareholder-activism-lessons-from-the-first-season-of-universal-proxy https://www.kirkland.com/publications/kirkland-manda-update/...

by nyssos 3y ago

ElevenLathe 3y ago

Shareholder capitalism is mystification: even if I and 51% (or even higher percentage) of other General Motors shareholders walked into the Renaissance Center in Detroit with signed affidavits demanding some course of action, the law is such that the management doesn't have to do it, and we can't really do anything about it. The reality is that widely-held public companies offer this deal: We (the executive class) get to do whatever we want, and you can come along for the ride or you can get off. There is no room for your input in any capacity other than as a consumer. Unions, on the other hand, can have their leaders show up and actually get a meeting. I hope activists shareholder gambits like this can move the needle in some way, maybe even build into a movement and surprise me, but the most practical way ordinary people can change corporate behavior is probably still labor organizing, as unsexy as that is.

Sabinus 3y ago
Can't that 51% of shareholders vote on a new board and CEO if the existing ones refuse demands?
- ElevenLathe 3y ago
  In my limited understanding, this is only theoretically possible. It requires a proxy fight, which requires specialized lawyers and is therefore very expensive. Simply owning the shares isn't enough, you also have to have the money to exercise the legal rights they theoretically entitle you to.
  - Alpha3031 3y ago
    For some context on the costs, SEC analysis for 2017–2020 puts the median figure at $750k, and the mean is over double, $1.8 million.[1] In more recent years, the costs have only grown. Despite being theoretically possible to run one for less than $10k if you basically just provide the minimum legally required notice, in practice anything like that is very unlikely to actually succeed, and median (mean) costs have been $1.1m ($1.2m) in 2022 and $1.0m ($2.7m).[2] That's just the costs directly involved in proxy fights themselves, there are also often other things that you might like to do to improve chances of success. Of course, even with the high costs, there are notable successes, such as Exxon having a quarter of their board replaced in 2021. And union organising is not mutually exclusive, in fact, Starbucks unions are seeking three seats on the board this year. But they're notable because of how rare they are, and the difficulties will mean that it's likely to remain relatively rare. On the other hand, having the precedent set that it's even at all possible does probably make it more likely for directors to acquiesce to even non-binding resolutions. [1]: https://corpgov.law.harvard.edu/2022/05/25/the-cost-of-proxy-contests/ https://corpgov.law.harvard.edu/2022/05/25/the-cost-of-proxy... [2]: https://www.kirkland.com/publications/kirkland-manda-update/2023/06/shareholder-activism-lessons-from-the-first-season-of-universal-proxy https://www.kirkland.com/publications/kirkland-manda-update/...