Tag: institutional investors

When theories collide: what happens when the shareholder preeminence theory meets the stakeholder theory?

Laurence Fink, the Chair and CEO of BlackRock, has issued his annual letter to public companies, entitled A Sense of Purpose.  As in prior years, Fink advocates enhanced shareholder engagement and a focus on long-term strategy development. (See this PubCo post and this PubCo post.) What’s new this year is that he is also advocating that companies recognize their responsibilities to stakeholders beyond just shareholders—to employees, customers and communities.  Holy smokes, Milton Friedman, what happened to maximizing shareholder value as the only valid responsibility of corporations?  

NACD report on “Culture as a Corporate Asset” couldn’t be more timely

Recently, corporate cultures—or, more particularly, serious lapses in same—have emerged as flashpoints at many businesses and even entire industries, often with significant negative press coverage and severe economic consequences. As a result, this new report from the National Association of Corporate Directors, The Report of the NACD Blue Ribbon Commission on Culture as a Corporate Asset, couldn’t be more timely.  The report suggests that boards would be well-served by paying more attention to oversight of company culture—not just for scandal avoidance, but also “as a way to drive sustained success and long-term value creation.”  A “healthy culture,” the report asserts, can serve as “a competitive differentiator.” The report includes a Toolkit with sample documents, questions and other useful materials.

Why have institutional investors become so outspoken on corporate governance issues at their portfolio companies?

The substantial increase in activism on corporate governance issues by large institutional shareholders and asset managers qua investors has been hard to miss. Now, joining the ranks of these other enormous asset managers and passive institutional investors—such as BlackRock and State Street (see, e.g., this PubCo post, this PubCo post and this PubCo post)—Vanguard has recently announced, in its Investment Stewardship Report for 2017, that it too has been taking a more active role in advocating for effective corporate governance at its portfolio investments. But what has triggered this shift?  After all, it’s not as though these institutional investors are new to the sport—they’ve been shareholders for many, many years, but mostly of the low-key variety.  Why this noisy advocacy now?

Is a proxy contest preferable to a quick settlement with activists? Some institutional investors think so

by Cydney Posner The obvious tension between the interests of long-term investors, such as institutional shareholders, and short-term investors, principally represented by hedge fund activists, has been the subject of much discussion of late.  Some observers have claimed, as argued in this NYT DealBook column, that the idea behind the financial […]

Will institutional holders begin to follow the activist playbook on their own initiative?

by Cydney Posner To date, for the most part, when it comes to shareholder activism, the heavy lifting has been done by hedge fund activists. Now, as discussed in this NYT DealBook column, institutional shareholders may be stepping out on their own.