I'm quoted several times by in a City Journal article critiquing shareholder activism. Highlights:
No longer content merely to change corporate America from the outside, public-pension funds are now taking advantage of a chastened and weakened post-Enron corporate America to shift the focus of their political and economic power to the inside of the corporate boardroom. Their resolve to change the world one shareholder resolution, press release, and board election at a time spells trouble for taxpayers, U.S. corporations, and the national economy.
... Since Sarbanes-Oxley became law two years ago, Nycers and Calpers have rolled out dozens of shareholder proposals targeting hundreds of companies. These resolutions cost corporate America $91 million annually just to process, estimates UCLA law professor Stephen M. Bainbridge—all in the name of shareholder democracy. ...
“Contrary to the democratic rhetoric of today’s shareholder activists,” writes UCLA’s Bainbridge, “limitations on shareholder voting rights are . . . as old as the corporate form itself. Separating ownership and control by vesting decision-making authority in a centralized entity distinct from the shareholders . . . is what makes the large public corporation feasible.” Investors don’t buy shares in a company’s stock because they think they can run the company better than the current management; they buy shares in a company’s stock because they believe that the current management is doing a good job and they want to get in on the profits.
If you're interested in a very compelling case against corporate governance activism by union and public pension funds, do go read the whole thing.
