Free Essay

Shareholder Activism

In: Business and Management

Submitted By epmartinez01
Words 463
Pages 2
We've seen a significant increase in shareholder activism in recent years, particularly from large institutional shareholders. One of these areas is that shareholders may now voice opinions on senior management compensation (though not a binding voice). However such activism extends much further to include proposed mergers, acquisitions or spinoffs. Provide some recent examples where shareholder activism has affected a company’s performance or actions, and discuss the consequences of this.

Ans: When we look at the history, we may observe many corporate scandals by the management of company’s inspite of shareholders approving handsome compensations for all these top management of the companies. But it may be observed that inspite doing a good work for the shareholders in terms offering better compensations; still many of the members of the top management team never think of doing justice and arrange to get better returns to each shareholder. As it is known that, shareholders approve the compensation of senior management, many in difficult times, there are proposal put off by the management for higher compensation which normally not accepted the shareholders. So they do not approve it. Even though there are difficulties in approving the compensation, the management tries kind of taking revenge and sending and ensures that, the company is stepping to a merger or acquisitions or spinoffs or share price goes down drastically by reducing the market value. It is observed in case of a company namely Barrick Gold Corporation, in Canada mentioning that rejection of $47 Million compensation by the shareholders, brought down the share price of the company to a price which the lowest in the last twenty years. In this case, the denial of approval was majorly done by the institutional shareholders. As a consequence of this, the company had very difficult time in terms of operational performance. Now viewing the difficulty levels of getting approval from shareholders for certain kind of decision, company like Dell preferred to go Private. So my views in this regard would be , the compensation committee presenting the compensation for the senior management should be legitimate and it also should be ensured, the compensation presented for approval are subject to the financial position of the company and profitability.

Davis, P., Yehia, R., & Tombs, A. (n.d.). Executive Compensation: Do Shareholders Have a Voice? Retrieved September 9, 2014, from
Dell Goes Private: 8 Things To Expect. (n.d.). Retrieved September 9, 2014, from
Cuña, V., & Gine, M. (n.d.). Say Pays! Shareholder Voice and Firm Performance. Retrieved September 9, 2014, from…...

Similar Documents

Premium Essay

Economic Analysis of Judicial Activism in India

...The author, through the medium of this essay tries to analyse the economic aspect of judicial activism in India with regard to transaction costs and opportunity costs. The author will first introduce judicial review and its correlation with judicial activism talking about instances when the latter is helpful and can be used, and the concept of separation of powers. Following which the author, once having clarified the concepts, will discuss the economic aspect of it. This analysis will determine whether judicial activism in the area of siphoning of government funds, provides any cost benefits, as to reduction of costs and the magnitude of its impact on the economy. To meet the ends of justice and ensure equality to all sections of the society especially the disadvantaged one, PIL was brought into effect in India with a view to fulfil these objectives which are in consonance with the objects enshrined in the Article 39A of the Constitution of India. During emergency there was lot of repression and governmental lawlessness; thousands of people were sent to jail with complete denial of their civil and political rights. Post emergency two judges Justices P.N. Bhagwati and V.R. Krishna Ayer have played a key role in promoting this avenue of approaching the apex court to the poor and the disadvantaged section of the society, seeking legal remedies in areas where public interests are at stake. The first reported case of PIL was in 1979 focussed on inhuman conditions of prisoners......

Words: 2396 - Pages: 10

Premium Essay

Shareholder Empowerment

...Introduction: Shareholder empowerment in Malaysia Presently, Shareholders of public companies in Malaysia have limited power in making corporate decision. The precise scope of the powers of each organ is defined by the company’s articles of association, general principles of company law and the Companies Act 1965. Directors usually have the power to manage the business of the company, with the members being entitled to vote only on limited matters expressly reserved to them by the articles of association or the Companies Act 1965. Although they are granted the rights to make decision on the management board and the approval rights in passing directors’ proposals, some shareholders find it inadequate as the current approval rights is a fairly weak tool in controlling agency problem. With wide and in-depth coverage of ongoing corporate tussles, shareholder awareness has improved to the point that shareholders now want to hold management accountable to proper corporate governance. Hence, in this essay, the issue of whether Malaysia should encourage shareholder empowerment to improve corporate governance in companies and thereby attract more foreign direct investment is discussed. To support my arguments three main decision-making power; rules-of the-game, game-ending and scaling-down; as well as the approval rights and proposal rights are discussed. Definition of Shareholder empowerment Shareholder empowerment means the increasing rights given to shareholder to......

Words: 2699 - Pages: 11

Free Essay

Community Activism

...Week 13 – Community Activism Chapter 4: Community Activism and Environmental Justice: The Dudley Street Neighborhood Initiative (Layzer 2012, 83) Background (Layzer 2012, 85) * The downfall of urban areas in the nation began in the late 1800s due to improved transportation and cheaper construction techniques. * This process propelled after WWII along with the construction of a national highway system. * The Federal Housing Administration’ s insurance program, which made mortgages possible, leaned toward single family homes opposed to apartment complexes. * Beginning in the early 1950s and continuing into the 1970s, white Americans left the cities due to the migration of African Americans from the south and school desegregation efforts. * “Redlining” prevented minorities from moving into suburban areas by discriminatory public and private lending and insurance practices. * By the 1980s older cities had an increase in poverty, crime, and physical deterioration. * A prime example of this is the Dudley Street neighborhood. This area started out filled with wealthy Bostonians’ country estates. It was a thriving working class immigrant community. * During the 1950s suburbanization hit the neighborhood, shifting the population from predominantly white to mostly African American. * Businesses vanished: the number of private enterprises on Dudley Street fell from 129 in 1950 to 26 in 1980: on Blue Hill Avenue the dropped......

Words: 449 - Pages: 2

Premium Essay

Activist Shareholders the ketchup to beans group. Other targets have included the restaurants group Wendy's, where he applied pressure to have its doughnut business disposed off. He also recently emerged as the largest shareholder in the jewellery group Tiffany's, with a 5.5% stake, and was thought to have been one of the unsuccessful bidders for Aston Martin, the luxury car marque which has just been sold by Ford. Mr Peltz, 65, made his name in the corporate raider arena on Wall Street in the 1980s. He made his first fortune with the acquisition and merger of Triangle Industries and National Can in 1985, selling the company five years later for a profit of more than $800m (£413m). He has had dealings with Cadbury in the past, having sold his Snapple soft drinks business to the group in a $1.45bn deal in 2000. He had bought it three years earlier for just $300m Trian campaigned stridently for Heinz to increase shareholder value. The outcome? Even before the results of the proxy were announced, Heinz management announced a $265 million cost-cutting plan and a $1 billion share buyback program the British maker of Dr Pepper soft drinks and Dairy Milk chocolate, said Thursday that it planned to split off its American beverage unit from its candy businesses, following pressure from shareholders, including the billionaire Nelson Peltz Last year, Mr. Peltz waged a six-month battle at Heinz, demanding five board seats for his 5.5 percent stake and finally settling for two. He pushed for the sale...

Words: 987 - Pages: 4

Premium Essay


...shareholder is simply an individual, organization, or company that legally own share(s) of stock in a joint-stock company. By owning shares of stock, a company’s shareholders collectively own the company itself and therefore have the right to vote on decisions that affect how the company is run. This usually means the shareholders as part owners will push for company actions that increase their own financial returns. Definition: A company that uses the shareholder approach to conducting business typically views the impact of business operations on profit. In addition, the length of concern for changes in business operations is usually short-term; such as focusing on meeting quarterly or annual results. Attributes: * Shareholders are primarily concerned with the company’s bottom line. * In a traditional business models, shareholders have the primary influence on the company’s strategy, usually resulting in business model with the foremost objective to increase the company’s stock value. In a shareholder business model, a company only addresses the needs and concerns of four parties: investors, employees, suppliers, and customers; with investors and customers receiving the most attention. Stakeholder approach: To make an analogy, stakeholder and shareholders are like sparkling white wine and champagne. All champagne is sparkling white wine, but not all sparkling white wine is champagne. Similarly, all shareholders are stakeholders, but not all stakeholders......

Words: 857 - Pages: 4

Premium Essay

Art Activism

...Art activism is the practice of vigorous action as a means of creating political or personal goals by use of art. The type of activists practicing now varies greatly, from street artists to conceptual sculptors. Regardless of the medium, everyone has a common purpose for his or her work—attempting to create awareness and change. Embracing the creative nature of humans, artists send messages using visual content; forcing viewers to not only look but also feel the passion within them. The movement of advocacy is considered a phenomenon throughout the 21st century—demonstrating that your voice can be heard around the world if you shout loud enough. Conditional to the period in history, the description for art activism has been constantly evolving. Art activists first gained attention in the early 20’s when World War I began. Notable painters and sculptors from around the world came together to protest against the bourgeois ideologies they believed led to war. Referred to now as the Dadaist Movement, artists organized public gatherings, demonstrations, and publication of art and literary journals to protest the 'reason' and 'logic' of their conservative capitalist society. Marcel Duchamp—a popular multi-media artist, initiated one of the more infamous stories of his time when he submitted a store bought urinal, Fountain, to a annual high-society exhibition for the Society of Independent Artists. Because all artists were commissioned by the society, there was no jury for the...

Words: 1009 - Pages: 5

Premium Essay

Shareholders Wealth

...Shareholder Wealth Maximization Shareholder wealth maximization is the idea behind trying to drive a stock's price up. The shareholders are the actual owners of the company. By driving the price up the company becomes worth more than just the value of its assets. The sum becomes greater than the value of its parts. It becomes worth more to keep the business running than it would be to sell off the parts. Maximizing shareholder wealth is often the most important goal of a company; however, the bottom line is that profit is required to increase the dividends paid out with each common stock that constitutes shareholder wealth. Thus, an effective manager will be more concerned with the primary means of profit-making within a company. For example, Coca-Cola makes money by maintaining a powerful brand name and manufacturing an enjoyable consumer product. To maximize shareholder wealth, Coca-Cola must first maintain the status of its brand and product. Coca – Cola is one publicly traded corporation that you believe is maximizing shareholder wealth their vision is “maximizing return to shareowner being mindful of our overall responsibilities.” The company’s major goal is to further increase stake in global beverage market. Coca cola works to use their assets to become an even stronger and more competitive company for is shareowners benefit. Provide the public with beverages that satiates their consumers’ wants and needs. Partner with companies where loyalty is and maximize......

Words: 682 - Pages: 3

Premium Essay

Business Shareholder

...Analysis of Shareholdings as at 31 March 2010 | | Authorised Share Capital | : RM100,000,000.00 | Issued and Paid-up Share Capital | : RM69,739,750.00 | Class of Shares | : Ordinary Shares of RM0.50 each | Voting Rights | : One vote per ordinary share | |   | Shareholdings Distribution Size of Holdings | No. of Shareholders/ Depositors | (%) of Shareholders/ Depositors | No. of Share | (%) of Issued Capital |   |   | | | | 1 - 99 | 100 | 4.54 | 3,560 | 0.00 | 100 - 1,000 | 459 | 21.33 | 390,508 | 0.28 | 1,001 - 10,000 | 1,277 | 59.34 | 5,469,680 | 3.92 | 10.001 - 100,000 | 278 | 12.92 | 8,143,060 | 5.84 | 100,001 - 6,973,974 | 37 | 1.72 | 24,582,100 | 17.63 | 6,973,975 and above | 1 | 0.04 | 100,890,592 | 72.33 | Total | 2,152 | 100.00 | 139,479,500 | 100.00 | | |   | | List of Top 30 Shareholders/Depositors   | Holdings | No | Name | Normal | % |   |   | | | 1. | CCM Marketing Sdn Bhd | 100,890,592 | 72.33 | 2. | Employees Provident Fund Board | 5,835,800 | 4.18 | 3. | Amanahraya Trustees Berhad - Skim Amanah Saham Bumiputera | 4,545,300 | 3.26 | 4. | TM Asia Life Malaysia Berhad - As Beneficial Owner (PF) | 1,995,300 | 1.43 | 5. | CCM Marketing Sdn Bhd | 1,442,300 | 1.03 | 6. | Mayban Nominees (Tempatan) Sdn Bhd  - Mayban Life Assurance Berhad (Par Fund) | 1,000,000 | 0.72 | 7. | Jerneh Insurance Bhd | 870,000 | 0.62 | 8. | Mayban Nominees (Tempatan) Sdn Bhd  - Mayban Life Assurance Berhad...

Words: 645 - Pages: 3

Premium Essay

A Letter to Shareholders

...March 8, 20xx To the shareholders of Best Motor Works: As the new CEO of Best Motor Works, It is my goal to position Best Motor Works as a niche market leader for luxury vehicles. This will be performed through a clearly defined vision, mission and corporate strategy. Our Vision: Best Motor Works strives to produce the finest vehicles in their class, providing our customers with quality and service second to none. Our Mission: Best Motor Works will create maximum value to its shareholders by providing our customers with quality vehicles that meet or exceed their needs and expectations in each class. We will remain on the cutting edge of technology, and keep our product line fresh through innovation and superior service. It’s in our name, our customers expect it, and it’s how we do business. We are Best. BEST MOTOR WORKS: CORPORATE STRATEGY At Best Motor Works, we are aware of whom our customers are and the best way to satisfy their needs through a product line of vehicles that are tailored to the important concerns of each of their intended users. We currently manufacture a line of three automobiles, the Boffo, the Buzzy, and the Beaut. The Boffo is our offering to the family shopper, offering safety and quality. The Buzzy is the sports car, providing unequalled performance in its class. The final car in our line-up is the Beaut, providing luxury and styling to those that can afford the best. However, an excellent vehicle selection is not enough to sustain...

Words: 715 - Pages: 3

Free Essay

The Impact of the Internet and Social Media on Activism

...proclaiming that the new world of Internet activism transforms and extends activism in ways previously unthinkable, and the other camp insisting that Internet activism entices a new but widely disengaged audience that can be motivated to a lukewarm show of hands but not to real committed participation as seen in more traditional forms of activism. This debate is widely known as the 'activism vs. slacktivism' debate. However, it is rather short-sighted to approach this very complex subject matter with a plain black and white approach when every single byte offers 256 shades of grey to explore. Gladwell (2010) argued for the slacktivism camp, stating that the strength of people's social ties is the key determinant in their willingness to assume risk in activist endeavors, because stronger social ties to other activists help form a group identity and reinforce the connection to the activist community. This led Gladwell (2010) to deduct that the strength of people's personal ties to other activists directly correlates to their willingness to accept personal risk in activism. Gladwell (2010) contended that the Internet is largely incapable of fostering the strong individual relationships necessary for highly motivated activism because of the weak social bindings of social media networks. According to him, the Internet is a very successful platform for initiatives requiring little personal sacrifice, but is no good at all at serious committed activism. This argument fails to......

Words: 1185 - Pages: 5

Premium Essay

Institutional Investor Activism

...however several practical considerations which serve as disincentives to shareholder activism. The assertion that institutional investors have the potential and the incentive to contribute towards improving the corporate governance regime of their respective portfolio companies is a contentious issue. Some commentators on this subject have made a positive assessment of shareholder activism but empirical findings give a checkered history of the efficacy of such institutional investor activism thereby casting a shadow of doubt on the role of institutional investors in corporate governance. The analysis of divergent theories on the incentives and disincentives governing the behaviour of institutional investors in this regard becomes pertinent. The questions that are sought to be addressed in this paper are as follows - a. What are the various incentives and disincentives to shareholder activism among institutional investors? b. What are the techniques which may be employed by institutional investors to monitor the companies in which they invest? c. What are the reasons behind shareholder passivity? Is this apathy rational in the context of institutional shareholders? d. What are the implications of the empirical evidence of shareholder activism? e. What are the possible hazards involved in active intervention by institutional shareholders? f. Is institutional shareholder activism really desirable and feasible? g. What legislative......

Words: 5083 - Pages: 21

Premium Essay

Stakeholder vs Shareholder

...1.0 Introduction Managers often have to endure intense pressure from their employers with regard to the management of the business. Similarly, more pressure often comes from the surrounding people such as the employees, suppliers, competitors or even the surrounding community. Stakeholder and shareholder theories have been discussed intensely with each being viewed and exhibited as having both its merits and demerits. While some argue that the stakeholder theory is crucial in management, others fiercely content the notion. The supporters of shareholder theory argue that a business’ primary objective is to gain profits. Conversely, the proponents of the stakeholder approach contest that there are other things a business ought to be in consideration of besides profits. This never-ending debate often leaves business executives in a dilemma for the appropriate management style. Thus, this paper compares and contrasts the merits of the two theories in relation to the company executives’ responsibilities. 2.0 Theories at work 2.1 Decision-making in the stakeholders and shareholders theories. A stakeholder approach to management will help a business executive make the right decision quickly. One thing the stakeholder theory advocates is the inclusion of crucial stakeholders such as employees in a decision-making process. By utilizing this method, a business executive is likely to end up making the right decision because varied opinions are allowed. Employees and suppliers are......

Words: 3493 - Pages: 14

Free Essay

Hashtag Activism

...of advantages and disadvantages when using such apps and websites. In my opinion social media has been a huge advantage. With social media, we have been given a new and modern way to fight and to show awareness to many important topics. What we were given is something called Hashtag activism. What are hashtags though? Hashtags is something used in social media that begins with a pound sign then a word or phrase after it. This lets users who are interested in a certain topic, quickly find information about that topic. With Hashtag activism, people are able to make awareness on a topic within a few minutes. That’s why many activist uses social media as a tool to make huge amounts of awareness on such topics like #Ferguson (Michael brown shooting), #Ican’tBreath (Death of Eric Garner), #BringBackOurGirls (The kidnapping of Nigerian school girls by Boko Haram), and #BlackLivesMatter (Death of Sandra Bland). Hashtags has made it possible to let activist not only fight for what they believe in while they are protesting outside, but also when they come home. With sites and apps like Twitter, Facebook, and Instagram, there is a more possibility in achieving a certain goal of awareness. Hashtag activism also creates more opportunities for engagement and more help with donations. For every click, like, and favorite, users are getting involved and helping activists achieve their goals. It could be to gain a certain amount of money or to get the topic on the news, each time it is......

Words: 527 - Pages: 3

Premium Essay

Shareholder Wealth

...main goals of financial mangers is shareholder wealth (Ross, Westerfield & Jaffe, 2010). Stakeholders are important but not the ultimate goal of a business. In order to maximize wealth potential for all invested the risk and reward should be carefully considered (Adams, 2008). One technique for doing this is capital budgeting because financial managers are able to make decisions with the proper information about risk and reward (Bloom & Van Reenee, 2010). This may also allow for stakeholder incentives and a share at the wealth. The question may come down to concern over cash flows or profits (Charron, 2007). Cash flows can be a goal of stakeholders where profits are a goal of stockholders. Both stakeholder goals and stockholder goals have benefits. An example, is when dealing with externalities such as pollution with cause maximizing the value of the firm to cause a misallocation of resources (Yoshimori, 1995). In today’s volatile markets and combined focus including stakeholders could be more conducive. The U.K. is similar to the U.S. with corporate governance goals of maximizing shareholder wealth (Yoshimori, 1995). But, Japan is an example of a country that has much broader goals. In Japan the concern is with the larger group of shareholders (Yoshimori, 1995). Japanese Ensures businesses are run in such a way that resources are used efficiently and customers suppliers and employees are taken care of as well as shareholders. Financial managers may have......

Words: 394 - Pages: 2

Free Essay

Legal Activism

...Tereso Casiano Instructor: Van Hoy LST 2010:001 10 December 2011 Legal Activism In the legal profession, there are many people who become a lawyer not to get rich or to gain prestige, but who go into the law to make real changes. The practice of attempting to make changes to law through the courts is known as legal activism. Activist lawyers generally are passionate about the causes they are fighting for. They believe that there is a fundamental right to make changes to the law and that society demands that they do this. Some would argue that this kind of activism can be likened to that of the religious fanatic who has no doubts about what God wants of him. They argue that the law is supposed to remain constant and unwavering and that inconsistency in the law is dangerous to society itself. This paper will evaluate the above claims using examples of cases where activist lawyers have attempted to change a law that they believed needed to be changed and give examples of cases in which activism resulted in significant changes in not only the law as we knew it, but also society’s perception of right and wrong. Many lawyers believe that law was intended to remain constant and unwavering, and that any lawyer who tries to change the law is as dangerous as a religious fanatic. The difference between religious fanaticism and activist lawyers is that activist lawyers generally seek to reform the law in what they perceive to be an injustice to...

Words: 809 - Pages: 4