Carney writes:
You may have heard that Ralph Nader has called on Carl Icahn to help him resist the plan by Liberty Media to acquire the rest of Sirius XM.
It seems like a case of strange bedfellows. The famed consumer-advocate attempting to make common cause with the guy who was the original corporate raider. It even has some very smart people scratching their heads. ...
The answer is that the two positions aren't really that far from each other. What they have in common is that both are an attempt to rein in the primacy of corporate directors.
Under our current system—which is mostly one of director primacy—control of the corporation is primarily in the hands of the board of directors. The board, of course, is duty bound to maximize shareholder wealth.
But the decisions about how that is best done are typically in the hands of directors rather than subject to shareholder or stakeholder consent. (For more on the concept of director primacy, start with this paper by UCLA professor Stephen Bainbridge and then move on to just about everything else he's ever written.) ...
Thanks for the plug! (Although I actually do write about more than just director primacy. You can download a pretty complete set of my working papers - all 87 of them - from SSRN.com.) But Back to Carney:
Both types of shareholder activists ... stand to gain from legal rules that expand shareholder rights through the very same mechanism—the ability to put pressure on boards and management to make the kind of changes they demand. The difference is that hedge fund activists make gains in ways that tend to benefit the other holders of the shares in the companies they target, while labor-related activists can make gains that only benefit labor.
Because both see their interest in curtailing corporate board primacy, we can expect to see more of these not-really-so-unlikely alliances in the future.
Go read the whole thing.
