Ten years ago this month I posted a review of Monks, Robert A. G., The New Global Investors: How Shareowners Can Unlock Sustainable Prosperity Worldwide, Capstone Publishing, 2001. “His perspective is that of an aristocratic shareholder activist, not a street demonstrator against the World Trade Organization… Monks appears to believe, and I agree, that corporate control has been largely hijacked by CEOs for their own selfish interests.”
This seemed to be something of a turning point book for Monks. In previous books, he rejected the need for new laws. “No new laws need be passed, no new regulations promulgated, no new agencies formed,” as he says again in this volume on page 184. However, by the next page he concludes that “amendments or possibly new regulations may prove necessary.” Good, but then he went on to write that the President “can simply state that as a matter of policy the public good and the law of the land require effective and informed shareholder involvement in the governance of corporations.” (p. 184)
Compare that with Working Capital: The Power of Labor’s Pensions by Archon Fung, Tessa Hebb and Joel rogers (ILR Press, Ithaca, New York, 2001), written from a worker owner perspective. Working Capital is replete with examples of innovations by labor in corporate governance from binding bylaw amendments to acting by written consent without waiting for formal shareholder meetings. Unions have become the leading proponents of shareholder resolutions and they know how to organize a winning campaign in the boardroom, in the press and on the streets.
Reforms and revolution will take the combined efforts of those working with corporate and institutional investor elites, as well as union members and street demonstrators. The New Global Investors and Working Capital point to the enormous potential of pension funds.
Ten years ago, I also reported that the Florida State Board of Administration had become the nations most litigious pension system being involved in almost 300 securities fraud lawsuits against companies whose deceptive behavior it alleges compromised the value of its investments.
Delaware’s recently enacted statute allowing virtual only meetings was news. Charles Elson, director of the Center for Corporate Governance at the University of Delaware was quoted saying, “No one has (held a meeting solely online) and no one will. The surest way to encourage substantial shareholder ire and potentially run afoul of possible legal constraints would be to do that.” My prediction at that time: “They’ll increasingly webcast the meetings and secretly hope that shareholders will eventually just go away.”
We also saw the start of the European Corporate Governance Institute. “The 11 directors are split five academic and six general. ECGI’s mission is to improve corporate governance through independent scientific research and related activities taking into account the interests and concerns of the corporate, financial and public sectors.”