Investors Needed in the Boardroom

Shareholders used to be such pushovers. Investing legend Benjamin Graham once stated it was a ‘notorious fact… that the typical American stockholder is the most docile and apathetic animal in captivity‘. That always struck me as a dreadful state of affairs, and thankfully times have changed. Investor activism in in vogue. In North America investors like Carl Icahn and Bill Ackman are not only engaging with companies but showing outright forcefulness. Progress in Australia has been slower, but it was heartening recently to see Perpetual’s Vince Perzuzullo stop Insurance Australia Group from proceeding with its expansion plans in China. Shareholders don’t always have the right answers, but this is unquestionably change for the good. Engaged shareholders keep directors and executives on their toes, mitigating conflicts of interest between principals and agents, overcoming corporate lethargy, trimming excessive remuneration and sometimes simply forcing uncomfortable decisions to be made. Closer interaction between investors and directors should be applauded. As I show in this (VIEW LINK) what we need is more investors in the boardroom.