At annual shareholder meetings, the angry individual investor with a microphone has long been a staple, someone that management just had to deal with has they went about the rote business of having all non-management proposals voted down.
Evelyn Y. Davis typified this sort of activist investors. To be honest, these people were tolerated more than respected, much less feared. The bigger guns were the hedge funds and pensions. Now, we're seeing other shareholders step up their activity.
According to DealBook, "Increasingly it is mutual funds and other more tempered institutional shareholders who are criticizing lavish pay packages and questioning corporate governance. Emboldened by new regulations — and angered by laggard stock performance and recent scandals — this new crop of activists is voting down company policies and backing proposals to reform corporate boards. The movement has already stung a variety of companies, including Citigroup, Goldman Sachs and Wal-Mart."
Religious investors have also stepped up their activity. All this is going on, even though the vaunted proxy access rule (part of Dodd-Frank) was struck down by the courts. In the end, management still prevails on most resolutions, but management can't afford not to at least attempt to placate shareholder critics.
Banks know this well. It remains to be seen how Citigroup will respond to the stunning "no" vote on the say-on-pay issue. If it does nothing, it will have a lot to answer for next year.
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