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Shareholder activism: James Copland on 'This Week in the Boardroom'

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James Copland, director of Manhattan Institute's Center for Legal Policy discussed the release of Proxy Monitor 2012: A Report on Corporate Governance and Shareholder Activism on NYSE-Euronext's This Week in the Boardroom, a weekly on-demand webcast program "designed to educate board members and C-suite executives on topics/issues that impact their operational and strategic decisions." Reviewing the recently expanded ProxyMonitor.org database of shareholder proposals from Fortune 200 companies, Copland revealed that almost all shareholder proposals are being sponsored by a small number of investors, predominately labor union pension funds and social/religious activists, whose motivation appears to deviate from concern over share value. Copland also finds that the proxy advisory firm ISS substantially influences shareholder votes but that its recommendations are systematically biased toward shareholder proposals, relative to shareholders' actual voting patterns.

Overall, Copland finds that the shareholder proposal process may be oriented toward influencing corporate behavior in a manner that generates private returns to a subset of investors while harming the average diversified investor, which amplifies concerns about whether shareholder proposal voting is an effective tool for improving share value.

Additionally, the Manhattan Institute hosted an event for the release of the report featuring many prominent corporate governance experts including Harvey Pitt, former chairman of the SEC, and Paul Atkins, former commissioner of the SEC.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.