Shareholders Are People, Too | Hacker News Reader

Shareholders Are People, Too

bloomberg.com

13 pointsioblomov10 comments

Also, not to be a shill for Bloomberg, but Matt Levine's newsletter is available for free if you subscribe by email. AFAICT they are not selling the list or anything hinky either: I used a unique address, and nobody else is spamming it even after several years. The newsletter actually contains the full text, it isn't a link to a website with a paywall.

Same experience here, but my problem with the email version is that the footnotes aren’t back-linked, which drives me nuts! Oversight or monetization model, who knows?

Thanks! I needed to know that.

> Shareholders qua shareholders should prefer that the company emit the carbon and increase profits, but shareholders qua humans would prefer a livable planet.

I think if this were really how a substantial part of shareholders thought, we wouldn't even have this discussion, because climate change wouldn't even ever have become a problem.

> I think if this were really how a substantial part of shareholders thought

It is a substantial part of how shareholders think, as individuals: the problem is that there aren't good channels for sending that message. Shareholder meetings require coordination and are open to manipulation by the C suite, and the market only lets you say "good" or "bad", not "do this" or "stop doing that".

Shareholder capitalism is mystification: even if I and 51% (or even higher percentage) of other General Motors shareholders walked into the Renaissance Center in Detroit with signed affidavits demanding some course of action, the law is such that the management doesn't have to do it, and we can't really do anything about it.

The reality is that widely-held public companies offer this deal: We (the executive class) get to do whatever we want, and you can come along for the ride or you can get off. There is no room for your input in any capacity other than as a consumer.

Unions, on the other hand, can have their leaders show up and actually get a meeting. I hope activists shareholder gambits like this can move the needle in some way, maybe even build into a movement and surprise me, but the most practical way ordinary people can change corporate behavior is probably still labor organizing, as unsexy as that is.

Can't that 51% of shareholders vote on a new board and CEO if the existing ones refuse demands?

In my limited understanding, this is only theoretically possible. It requires a proxy fight, which requires specialized lawyers and is therefore very expensive. Simply owning the shares isn't enough, you also have to have the money to exercise the legal rights they theoretically entitle you to.

For some context on the costs, SEC analysis for 2017–2020 puts the median figure at $750k, and the mean is over double, $1.8 million.[1] In more recent years, the costs have only grown. Despite being theoretically possible to run one for less than $10k if you basically just provide the minimum legally required notice, in practice anything like that is very unlikely to actually succeed, and median (mean) costs have been $1.1m ($1.2m) in 2022 and $1.0m ($2.7m).[2] That's just the costs directly involved in proxy fights themselves, there are also often other things that you might like to do to improve chances of success.

Of course, even with the high costs, there are notable successes, such as Exxon having a quarter of their board replaced in 2021. And union organising is not mutually exclusive, in fact, Starbucks unions are seeking three seats on the board this year. But they're notable because of how rare they are, and the difficulties will mean that it's likely to remain relatively rare.

On the other hand, having the precedent set that it's even at all possible does probably make it more likely for directors to acquiesce to even non-binding resolutions.

[1]: https://corpgov.law.harvard.edu/2022/05/25/the-cost-of-proxy...

[2]: https://www.kirkland.com/publications/kirkland-manda-update/...

Reply on news.ycombinator.com