Corporate Activism Gives You Economic and Political Power!

In my 20s, I was convinced by many of the rich and powerful that I met that Corporate Activism was the answer to economic and political power to the Black, poor, and economic disadvantaged. I took my ideas to the NAACP. But they told me that economic power was not their mission. They are a civil rights organization.  I can't understand why the rich and powerful through economic power would not give people civil rights. I never seen a person heading large corporations plead for civil rights. That is when I understood that organizations such as the NAACP is self serving. It is not the National Organization for the Advancement of Color People.

Activist Shareholders

An activist shareholder uses an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, financing structure, cost cutting, etc.) to non-financial (disinvestment from particular countries, adoption of environmentally friendly policies, etc.). The attraction of shareholder activism lies in its comparative cheapness; a fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign. In comparison, a full takeover bid is a much more costly and difficult undertaking.

Shareholder activism has gained popularity as management compensation at publicly traded companies and cash balances on corporate balance sheets have risen. Not only are the aggregate dollars invested in the activist asset class continuing to grow, but activists are also generating significant positive attention from mainstream media by taking more sophisticated approaches to identifying their platforms and running their campaigns. Once derided as corporate raiders, shareholder activists are now the recipients of admiration for sparking change in corporate boardrooms, leading to corporate boards developing best practices for responding to shareholder activism.

Shareholder activism can take any of several forms: proxy battles, publicity campaigns, shareholder resolutions, litigation, and negotiations with management. Daniel Loeb, head of Third Point Management, is notable for his use of sharply written letters directed towards the CEOs of his target companies.

Some of the recent activist investment funds include: California Public Employees' Retirement System (CalPERS), Icahn Management LP, Santa Monica Partners Opportunity Fund LP, State Board of Administration of Florida (SBA), and Relational Investors, LLC.

Due to the Internet, smaller shareholders have also gained an outlet to voice their opinions. In 2005, small MCI Inc shareholders created an online petition to protest the MCI Inc/Verizon merger.

Carl Icahn

Activist Investors

During the 1980s, notable activist investors such as Carl Icahn and T. Boone Pickens gained international notoriety and were often perceived as "corporate raiders" for acquiring an equity stake in publicly owned companies, like Icahn's investment in B.F. Goodrich, and then forcing companies to take action to improve value or rid themselves of rebel intruders like Icahn by buying back the raider's investment at a fat premium, often at the expense of the other shareholders.

In an Opalesque.TV interview with notable activist investor Phillip Goldstein of Bulldog Investors, Goldstein describes the role of an activist investor as that of a catalyst unlocking value in an underlying security. He goes on to say that the public perception of activist investors has changed, and this image of "corporate raiders" has dissipated.

Notable activist investors:

• Carl Icahn
• Daniel Loeb
• Ralph V. Whitworth
• Kirk Kerkorian
• Warren Lichtenstein
• Alexey Navalny
• Stephen Mayne
• T. Boone Pickens, Jr.
• Sister Patricia Daly
• Phillip Goldstein
• Thomas Strobhar
• Theo Botha
• Barington Capital
• David M. Webb
• William Ackman
• Guy Wyser-Pratte

Shareholder Investing

Taking an activist approach to public investing may produce returns in excess of those likely to be achieved passively. A 2012 study by London-based research firm Activist Insight showed that the mean annual net return of over 40 activist-focused hedge funds had consistently outperformed the MSCI world index in the years following the global financial crisis in 2008.

^{What  if a group of investors wanted more Blacks and minority hiring in the corporation?his actually happened with Season-all Industries  in Indiana County in Pennsylvania in the 1970s. I put a motion on the ballot and stockholders had to vote on it. The resolution lost but it got the attention of EEOC who investigated their hiring activities. The result, the government demanded that they hire minority workers before they could get anymore Federal Contracts.}

Organizations such as the Interfaith Center on Corporate Responsibility (ICCR) and Ceres use shareholder resolutions, and other means of pressure, to address issues such as sustainability and human rights.

Shareholder rebellion

Shareholder rebellion occurs when the owners of a corporation work to throw out management or oppose their decisions. Shareholder rebellion may occur at a corporate annual meeting or through a proxy battle. Shareholders may also threaten to collapse a firm's stock price through concentrated selling. In 1998, the Rockefeller family led a shareholder revolt against Exxon over its climate change policy. In 2005, Michael Eisner retired after Walt Disney's nephew, Roy Disney, led a shareholder revolt, claiming Eisner was a micromanager who had caused a creative brain drain. In 2010, British Petroleum and Shell faced a shareholder revolt over its Canadian tar sands policy.

Recently, shareholder rebellions have occurred over the issue of executive compensation at Cable and Wireless and Shell; Shell in response unveiled a plan to curb executive compensation and bonuses. According to some analysts, institutional shareholders have been lax about holding management accountable because they were concentrating on picking correct stocks rather than protecting their interests in the stocks they owned. With many firms showing poor performance, shareholder revolts are becoming more common.

 
In the 1970s, I was the darling of the financial industry in the Pittsburgh Area. My idol at that time was a smart German Jew,  Siggi Wilzig. We use to talk on the phone when he became the head of Wilshire Oil Company of Texas.

Born in Kronjanke in West Prussia, Siggi Wilzig was sent to the Auschwitz concentration camp when he was 16. He came to the United States in 1947 and got his first job shoveling snow in the Bronx after a blizzard that winter.

Mr. Wilzig stopped shoveling snow, and in the 1950's pursued a number of trades. Early on he was a gluer and presser in a Brooklyn sweatshop. He was a traveling salesman; he managed a furniture store in Hillside, N.J. But unlike others of modest means, instead of putting his meager savings in the bank, Mr. Wilzig invested in the stock market.

 

The investment he and more affluent colleagues made in the oil and gas producer grew so large that in 1965 Mr. Wilzig was elected a member of Wilshire's board. Six months later, at age 39, he was elected president and chief executive.