Shareholder Activism: Storming The Corporate Castle

These are strange days indeed for shareholder activism. By some measures it’s experiencing a surge. Progressive groups have used the strategy since the early 1970s, but the past few years have seen an increase in its frequency, sophistication and success.

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In December, for example, the defense contractor Northrop Grumman announced that it would immediately end its membership in the American Legislative Exchange Council (ALEC), a key player in the push to privatize education and a purveyor of climate-change denial. The move came in response to a shareholder resolution filed by an activist group that owned stock in the company. More than 100 companies have withdrawn from ALEC over the past four years, many under shareholder pressure.

Shareholders have also been a critical part of the broad coalition that has taken on Walmart for practices ranging from low pay to unfair demands on pregnant workers. Walmart adamantly denies that the work of activists has any influence on its decision-making, but in February it announced that its base pay rate would increase to $9 this spring and to $10 early next year. The company has also promised to accommodate pregnant workers.

Shareholder activism is premised on the idea that capitalism contains the seeds of its own reform. Owning stock gives shareholders a voice in deciding a company’s policies — and since most shareholders are passive, a highly motivated minority can have an outsized influence.

Source: Colorado Springs Independent

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