The Methods of Shareholder Activism
People get certain mental images when they think about how activism works. The protester has become the iconic image of the activist, at least in the minds of many. Protesters certainly do important work. They manage to raise awareness about particular issues. They get public discussions going about certain issues, which can sometimes inspire massive cultural changes. Large media events get people talking, get people thinking, and get people to give donations. However, staging media events and protests is just one part of the picture.
Those kinds of large media spectacles will help promote cultural change. However, in many cases, a problem isn’t simply an outgrowth of a corrupt society or culture. Some problems really can be traced directly to individual government departments or corporations. The people who are trying to eliminate the problem on a cultural level are only going to be able to go so far if a lot of their efforts are undone as a result of the actions of specific individuals. These specific individuals in this instance can be defeated as a result of the actions of people like shareholder activists.
Shareholder activism is certainly not as dramatic as the activism that people associate with protests and protesters. Protests are large and loud and designed to attract attention. A lot of shareholder activism is going to occur at the annual meetings of companies, and that’s all. Shareholder activists may share their concerns with the management of a given corporation, and they will do it using the same business language that they would use with all of their other interactions with the management. A person on the outside may not even immediately recognize that any activism was going on, unless they knew enough about the issues at hand.
Shareholder activism often involves writing out proposals about how given companies can change. The shareholders in question will discuss the problem in detail during these proposals, and then they will usually recommend detailed suggestions for solutions. A proposal that lacks any sort of details on how to solve the problem is going to be a fairly weak proposal, so shareholder activists are going to need to make sure that they can effectively back up what they are saying.
Shareholder activists are also typically going to need to be able to win the support of many of their fellow shareholders in order to get their proposal the approval that it needs. Shareholders will often stage votes on these proposals. The voting system will work differently depending on how a given company is run, but shareholder activists are rarely going to be able to accomplish anything without getting the support of a lot of the people that they work with, and not just the management of the company in question.
Communicating with the management directly can be a trickier method, although it has certainly worked in many cases. Some shareholder activists will merely try to replace the management altogether. They can often accomplish that by just changing the people who are at the top, even as they keep all of the other employees the same. They won’t necessarily have to get more than ten or twenty people fired in order to make the changes that they need. Often times, it is only the people at the very top who have much of a say in these kinds of decisions, and it is only necessary to replace them.
However, in some cases, it won’t come to that. Shareholder activists can simply try to get the management to understand their positions and make the changes that they want. Management members will certainly understand the risks involved if they don’t listen to their shareholders, and they will often consider the changes to be preferable. The power differential between managers and shareholders is complicated, and bridging it can really make all the difference in the world for socially conscious shareholders.