A proxy advisor surveying the proxy season says business will pick up – if the market doesnt go south.’ He remembers the last recession when shareholder proponents upped and ran for cover.
So experience says that in hard times, shareholders vote with their feet and just walk away; or that they’re too busy with simple survival to worry about the lofty aims of activism. But what about all the hard won corporate governance progress – drawn tooth and nail from mulish management – if the market goes belly up? Will reforms fall by the wayside and managements revert to their wicked old ways? Will poison pills and classified boards proliferate as companies battle to stay off the M&A auction block?
Hopefully there is no going back. Perhaps – with the exception of some dinosaurs in, say, Decatur, Illinois – corporate executives now recognize that good governance and good behavior presuppose good performance.
By some accounts, that dictum is about to be kicked up the bottom line in terms that any CEO can understand: We won’t wear your shoes, gas at your gas station, or brush with your toothpaste unless you start behaving properly. And it’s women in particular, announces Patricia Schroeder, retiring congresswoman and Texaco board nominee, who will cast their vote with their spending dollar by only buying things from ‘good’ companies.
Besides the specter of woman shopper as corporate governance activist, ‘Pundit Pat’ brandishes another threat to make executives quake in their loafers: the privatization of social security. Look at Chile, she says, where social security funds are invested in stocks and bonds and each woman and child is a vehement and vocal corporate governance advocate.
Indeed, from most perspectives, corporate governance looks like the same non-resealable can of worms. Even if the market goes down the tubes, America is a nation of shareholders who won’t be shut up.
‘Activism is dead,’ drawls back another proxy solicitor over Christmas party canapes. ‘Everyone knows what’s wrong and what’s right by now. And what my clients don’t know, I can tell them.’
America’s executives should deafen themselves to this comforting but muddled refrain, or risk being drowned by a rising chorus of activism. That’s the price of corporate survival – whether or not the market tanks.
