Shareholder Activism, Democratic Data, Public Markets and A Thousand Points of Light

A few interesting items:

Item 1: Activism and Boards

This new study from the IRRC and ISS provides comprehensive data on board refreshment activity in the wake of shareholder activism campaigns.  Unlike much of the noisy data that people try to collect about the value of activism, this study measures “real-time impact,” as the authors note.  As I have written elsewhere, it is a mistake to label activism itself as “short-term,” “long-term,” “stakeholder-friendly” or any other value-laden label.  It is a tool, and can be used by shareholders with varied motives and strategies.

But given activism’s prevalence– clocking in at 500+ campaigns a year— it is critical that we understand its impact.  And looking at its effect on the the compostion of boards is certainly an important way to do so.  The study looks at a variety of parameters– independence, board size, tenure, age and occupation. But two items stood out to me.

The first was a finding that “activism was accompanied by an erosion of gender and racial/ethnic diversity on targeted boards.”  This cannot be a good thing from any perspective, whether of the value of the corporation over the long term, of growing an inclusive economy that raises the value of all investors’ portfolios, or of building a society that practices all forms of equality.

The second point that struck me was the fact that 30% of the directors nominated by dissidents or put on the board as a result of settlements were financial service professionals (compared to 10% of incumbent supported-nominees).  The financialization of the real economy is, in the minds of many, a real threat to the long term creation of durable value.  See for example What They Do With Your Money, by Stephen Davis, Jon Lukomnik and David Pitt-Watson and Other People’s Moneyby John Kay.  So what does it mean when activists populate boards with professionals from the financial service industry, rather than people with experience in the real economy of goods and services?

Universal investors and other owners who want to steward responsible corporations and preserve and improve critical environmental and social systems should pay careful attention to this groundbreaking work, and think hard about the candidates proposed by each side in proxy contests.

Item 2: Brett Hurt on Data and Benefit Corporations

Forbes recently featured this fascinating interview of Brett Hurt, the co-founder of, by Jay Coen Gilbert, co-founder of AND 1 and of B Lab.  Hurt describes’s mission to refine and link the enormous amount of information that is now available: “people say that data is the new oil. but the truth is that it’s crude, unrefined and hard to find.”

He also explains why the company, which has executed two successful rounds of fundraising, became a benefit corporation early on:

II knew it would be incredible for recruiting, for centering our board of directors around our mission, and for setting the public tone, because we report against our mission publicly. For this type of business, it’s perfect.

He also explained how it has helped to build the company’s profile:

I was at SXSW last year, before we launched. I was with Megan Smith the Chief Technology Officer for the Unites States at the time. I was explaining to her what does, and she was interested because she had helped pioneer some open-data initiatives within the federal government, including launching But when I told her we were a benefit corp, she stopped in her tracks, pointed at me and said, “I have been waiting for someone like you to come along.”

Item 3: Bloomberg on Public Markets and Benefit Corporations

This article in Bloomberg by Andrea Vittorio has a good discussion of the the current interest in bringing the benefit corporation idea to the public markets.  It notes that B Lab has created a council to examine all the implications of scaling up its certification for multinational and public corporations. One member of the group explained their work:

“In order for public companies to embrace this, there’s a lot of legal history and statutes and regulations that you have to think through and perhaps have changed,” Margaret Foran, chief governance officer and corporate secretary at Prudential Financial Inc., told Bloomberg BNA. Foran, who sits on the council, said it was formed to think through issues like a B Corp board’s need to weigh the interests of both shareholders and other stakeholders such as workers and local communities.

Foran knows about changing ideas in corporate governance: she is known for having created the first majority voting provision, the so-called “Pfizer bylaw.”

Item 4: 1,000 and Counting

August 1 was the fourth anniversary of the adoption of Delaware’s benefit corporation provisions.  One thousand benefit corporations have now been created in Delaware. Seven of those (less than 1%) have switched back to conventional corporate governance.

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