Beyond the Proxy Vote: Dialogues Between Shareholder Activists and Corporations

Abstract

corporate social responsiveness, dialogue, ethical investing, shareholder activism, shareholder resolutions, socially responsible investing, stakeholder engagement, Interfaith Center on Corporate Responsibility,

Socially Responsible Investment and Fiduciary Duty: Putting the Freshfields Report into Perspective

“…Institutional investors would in theory be the perfect shareholder activists because they often control substantial quantities of shares in the companies they have invested in, and there is actually a growing pool of evidence showing that many activist campaigns have been quite successful -at least when they have been conducted by influential coalitions or very large financial institutions like CalPERS (see e.g. Hebb, 2008;Kanzer, 2009;Logsdon and Van Buren, 2009). Some experts also suggest that recent amendments to the legislation surrounding corporate governance in countries like the UK and the US are likely to make activism even more effective in the future.…”

“…And according to many commentators, simply proposing shareholder resolutions or voting on resolutions at shareholder meetingswhich would be the easiest and cheapest form of activism -is not the most effective way of indeed making a difference to corporate policies. Management typically controls the majority of the votes at these meetings (because of their control over absentees' votes), and resolutions are only non-binding requests to management anyway (Logsdon and Van Buren, 2009;Sandberg, 2008;Strätling, 2003). More effective forms of activism may be continuous dialogue with management, interaction with other investors and interaction with the media, but such practices will often require more resources on the part of the acting institutions (Hebb, 2008;Logsdon and Van Buren, 2009;Sandberg, 2008;Wen, 2009).…”

“…Management typically controls the majority of the votes at these meetings (because of their control over absentees' votes), and resolutions are only non-binding requests to management anyway (Logsdon and Van Buren, 2009;Sandberg, 2008;Strätling, 2003). More effective forms of activism may be continuous dialogue with management, interaction with other investors and interaction with the media, but such practices will often require more resources on the part of the acting institutions (Hebb, 2008;Logsdon and Van Buren, 2009;Sandberg, 2008;Wen, 2009). The more hard-line these activist campaigns get, furthermore, the more shareholders also open themselves up to libel charges and counteraction from the companies targeted (Sandberg, 2008).…”

Shareholder Activism in Malaysia: Is it Effective?

“…Dialogue, a behind-the-scene type of activism that requires confidentiality, has gained momentum in the world of shareholder activism (Logsdon & Van Buren, 2008;Rehbein, Logsdon, & Buren, 2012). Moreover, unlike dialogue, shareholders' proposal have been widely employed by various activist investors, such as social groups, individuals, and institutional investors, with the intention of directing attention, raising awareness, and challenging managers to enhance their firms' social or financial performance (Chung & Talaulicar, 2010).…”

Irresponsible Engagement and the Citizen Investor

“…The superannuation funds and their external investment analysts and managers could then actively engage with the management of listed companies on issues of importance to their fund members. In some cases, this may require the superannuation funds to act in an activist capacity (Logsdon & Van Buren, 2009). …”