Shareholder activism can lull us into a false sense of security and make us forget that there are bigger corporate governance fish to fry.
The annual corporate shareholder-voting season is primarily a rite of spring. Although Apple, Disney, Deere, and Hewlett-Packard have already produced their voting materials, over 70% of Fortune 100 public companies that file these documents with the SEC send out their ballot notifications in March or April.
Although most votes by shareholders are not binding, the vociferous hyperbole around shareholder activism relies on war and sports analogies—lots of “them” and “us”—which sells newspapers and belies the very notion of “investor relations.”
But does this springtime ritual have any substance, as it does in the animal kingdom when males (or females,depending on the species) put on displays of strength, mark their territory, and secure dominance over their resources? And does the process really reform wayward companies and improve public trust in business and capitalism?
Robert A.G. Monks, co-author of the book Corporate Valuation and founder of Lens Governance Advisors, told me that there is a mythology around corporate governance and that the right questions don’t seem to be addressed amid the spectacle of proxy season. Consider the issues around corporate domicile or the responsibility of firms for the costs they impose on society, he says. Read more here.