Understanding Shareholder Activism
Shareholders have a lot of power within corporations and businesses. Some shareholders use that power to become wealthier themselves. Other shareholders use that power for the sake of trying to influence how that company is run for one reason or another. Many of these shareholders are actually doing shareholder activism. They disapprove of some of the actions of a given corporation, or they are trying to change the way a given corporation is run for moral reasons. This practice has become common enough that shareholder activism gets discussed quite frequently in investment circles and financial circles.
At its core, activism often involves concerned citizens trying to pressure the people in power to make changes. Activists are only going to have so much power themselves almost by definition, or they would simply change things immediately themselves. Some activists are able to make changes behind the scenes. Other activists make changes in a more public manner. Shareholder activists are doing a little bit of both in some ways.
Shareholder activists can often be more effective than many more conventional activists because, to a certain extent, they are powerful people themselves. They may not be as powerful as the people who own the corporations, but they are at least partial owners of the corporations in which they are shareholders. As a result, they are able to make changes more directly than many other activists. Far too many other activists are more or less forced to try to pressure corporations to make changes themselves, but to corporations, they are simply private citizens.
Activists often have to get large groups of people together in order to bring about any major changes. Rallying large numbers of people is certainly no easy task. Many corporations still won’t listen to large groups of activists unless they are convinced that their profit margins are going to be negatively affected otherwise, and even then, many of them will be convinced that their companies can survive anyway. Shareholders already have what many activists are trying to achieve in the first place: they have the power to influence the decisions of many corporations. A tiny group of shareholders can sometimes accomplish far more than a large group of activists, for better or for worse.