I remember Mark Thomas doing this years ago, I think it was part of the Ilisu Dam campaign.

I don’t know why people would find it impenetrable to find out who owns publicly listed companies. They are all listed on the shareholder register with the information freely available. Institutions like pension funds and insurance companies usually hold a majority stake. Buying a share to ask questions at the AGM could generate publicity for activists. However, the institutions will nearly always when it comes down to it blindly support the board in a vote.

Purchasing just one share is a potentially powerful tool to advance progressive causes.

That’s the same excuse that people give for party membership. How does it actually work?

Bensix – you do some research, you buy a share, you turn up to the AGM and you ask difficult questions. You do a stunt or make some noise and force them to address your concerns via pressure.

“I suspect that the belief in the impenetrability of financial institutions is partly due to a lack of will among people to find out what’s going on because it seems too complicated”

Yep.

Some good points, and advice activists should take seriously. I would suggest, though, that the openness you mention in city bars is largely due to the speakers being secure in the knowledge that the big funds won’t be awkward.

Tesco shares anyone?

Tesco is to remove hundreds of council bottle banks and recycling bins in its supermarket car parks, denying local authorities of millions of pounds of revenue.
http://www.telegraph.co.uk/earth/earthnews/8474989/Tesco-takes-over-500-council-recycling-centres.html

How about bank shares?

Vince Cable has put banks on notice to boost lending to small business or face further government action, saying they must stop protecting their own interests at the expense of the economy.
http://www.ft.com/cms/s/0/37be4b8a-7104-11e0-962a-00144feabdc0.html#axzz1Kpa95akC

You do realise this is exactly how popular share ownership was intended to incorporate different views – by allowing debate and difficult questions.

Next stage – breaking down the block votes and allowing shareholders to actually run their companies properly – perhaps we all need to buy more shares?

@8 Yes, let’s pay benefits in bonds.

How exactly do you propose to break down block and proxy votes, Watchman? If you have one share and I have one million, you get one vote and I get one million votes.

Bensix @3: Further to Sunny’s response, I don’t think the author of the piece is suggesting that share ownership in itself will bring about the change you want. Indeed nor will activism rooted only in that share ownership, but I’m happy to acknowledge that as part of a package it might have some effect.

Certainly there’s something to be said for just being in attendance, whether it’s in city bars or AGMs, to find out what’s going on and expose stuff to a wider public.

As one example, people attending the BP AGM the other week were able to establish that neither Blackrock nor Legal & General, who between them hold (on behalf of other investors) around 9% of all BP shares, had not even bothered to send a representative to the AGM, even in the wake of BP’s disastrous year and in the context of its controversial arctic dealings. This news, while not front page stuff, is raising concern about whether’s Blackrock – a major fundholder’s – is actually as committed to the social responsbility agenda it officially espouses, and in turn may influence decisions of organisations about whom they choose to manage their funds. (For sources etc., see http://thoughcowardsflinch.com/2011/04/15/so-who-wasnt-at-the-bp-agm/)

This is an example of shareholder activism at the ‘dry’ end of the scale (and it is also mixed up with more traditional ‘angry investor’ activism where dividends are not meeting expectations) and the BP AGM also saw the kind of stuff (e.gf.g gorups of fishermen from Louisiana) involved in the public protest that Sunny is interested in seeing develop, but I see both forms (and all the bits in between) as potentially useful.

Richard,

How exactly do you propose to break down block and proxy votes, Watchman? If you have one share and I have one million, you get one vote and I get one million votes.

Well, my suggestion would be to perhaps increase either the number of people holding one share or the number of shares I hold…

I’d also like to see the financial markets liberalised so that it is more difficult for a small number of large institutions to control so many shares of so many companies, because they cannot guarantee their market share – government regulation creates an effective oligopoly in finance, which in turn means there is an oligopoly in board rooms.

It sounds a nice idea and I am all for openness but the whole of the “shareholder = owner” is a bit of a fallacy. Shareholders have very limited control of a company, and having a voice at an AGM might sound effective (and certainly might do something in the media on a slow news day) but it will have very little effect on corporate behaviour.

If you ask me a TINY dose of understanding of companies’ capital structures would be far more beneficial, and help activists understand the world.

(BTW the BP disaster was largely about Transocean – you all know that right?)

If there are specific concerns about the activities of certain companies I think activists would have more of an effect by targeting the funds themselves rather than the companies where they place investment. Companies are more likely to alter their behaviour from institutional pressure than from activists at the AGM. For example, the biggest equity investor in Europe is NBIM, which is the Norwegian sovereign wealth fund. They have dozens of companies excluded from their investment. NBIM even exclude some of the large mining companies which seems a bit strange considering their wealth comes from oil. How many people in the UK actually know where their pensions are being invested? If activists have concerns about BAE selling arms to X country getting Legal & General to share those concerns will achieve more than asking questions at the AGM.

@8 “Next stage – breaking down the block votes and allowing shareholders to actually run their companies properly – perhaps we all need to buy more shares?”

Shareholders effectively own “profit shares” in a company, as well as certain option rights. The concept of “ownership” is very confusing in this context but the financial media don’t know enough to be able to understand that and so use it as a simplification.

Did not work with 46 years in the Labour party as a paid up member and an activist, think saving your money under the bed is better these days.

Thanks for posting this. It is true that a lot of crap is hidden behind stuff we think is too complicated. I remember some chef trying this with Tescos attitudes to chickens a while back.

Sunny, Paul –

Yeah, but the question is how much and what kind of “pressure” would be meaningful. Obviously it depends on what you’re trying to change – if it’s a local council, say, then turning up and being a nuisance might produce worthwhile results, if it’s a multinational it won’t – but I think there needs to be more thought on where and how this “pressure” actually translates into change.

12. Watchman

“Well, my suggestion would be to perhaps increase either the number of people holding one share or the number of shares I hold…

I’d also like to see the financial markets liberalised so that it is more difficult for a small number of large institutions to control so many shares of so many companies, because they cannot guarantee their market share – government regulation creates an effective oligopoly in finance, which in turn means there is an oligopoly in board rooms.”

What exactly needs liberalised in order to allow more people to buy shares? It has never been easier or cheaper. What is stopping them from buying now? To own 1% of BP would cost you around £1 billion and just another £50 billion to go to own a majority stake. Small shareholders with a controlling stake in large companies is I am afraid pie in the sky. Long only funds buying to hold do not give a shit about their market share in equity markets, they only care about the returns on their investment. Moreover, they would welcome more buyers in the market as that increases their capital invested. There is no oligopoly in equity markets, the institutions are large players because it is with them that people save towards their pensions and annuities.

Small retail investors could have more influence on small cap companies. However, to have much influence the company would need to be quite small and that increases the risk that the small retail investor would lose all their investment. Small shareholders are better staying away from small companies and just buying and holding in large companies and riding out the peaks and troughs. When they buy shares in really small companies there is nothing surer than they will buy near the top of the market and sell at the bottom or the company will go bust.

Small-scale shareholder activism is a first step: If you need guidance, check out FairPensions guide: http://www.fairpensions.org.uk/shareholderactivist

The next stage would be pooling strategies – people getting together under some type of mutual fund to directly target companies that have crap records.

In the end, large institutional investors are obviously key, and this remains a very under-utilised avenue for change – it is easy to find out who the biggest investors are, especially in the UK and US, and it is possible to lobby them directly. Increasingly, many activist organisations are realising that you at least need to learn to speak the language of investors. For example, take Shell’s operations in Nigeria: The traditional approach has been to berate them from an ethical standpoint, but you could just as easily get up at an AGM and say something like, ‘as a shareholder in this company, I believe that your failure to pay adequate attention to environmental degradation in the region is leading to local political tensions which are increasing the level of political risk in my investment. What are you doing to reduce this risk?’ – Investors think in terms of risk and return, and large institutional investors would automatically understand that as a legitimate argument.

To control a company you have to own or control 51% of the shares. You may own 30% but if you can unite with someone with 21% you can have control.

Funny how the same people on the right think it is not acceptable for the voting system.

Actually, you can exert some degree of control a company with far less than 51% of the shares, especially in the US and UK where shareholders tend to be fragmented. Holding above 5% of the shares puts you in a powerful position in many companies.

@22 I think you need to think carefully about what you mean by “control”.

Here’s what 18% stake gives you:

http://www.telegraph.co.uk/finance/newsbysector/transport/8478460/National-Express-wins-corporate-governance-groups-backing.html

Nada.

Good article.

I think some are missing the point regarding how effective this is. It isn’t either/or. It’s a tool that encompasses the vast and complex spectrum of actvism.

A big pet peeve of mine is how limited and clueless people are about effecting change. Sometimes I wonder if the left truly ever want to win anything, as they are so twisted up by their egotistical need to do things THEIR way.

It’s interesting what can be done if you’re strategic and relentless enough.

I also don’t think it’s so much that people think the information is complex, as much as they just don’t want the responsibility of knowledge.

We have an inherent human obsession about having an enemy. Them vs Us. A deep victim complex that is unshakeable and comforting like a warm blanket to the majority of the human population.

Interesting points in comments 24 & 25. Take a look at this blog post I wrote: http://suitpossum.blogspot.com/2011/04/introduction.html. I have personal experience on both sides of this psychological issue.

I think there would be a point to this if we had one shareholder, one vote. sadly that level of democracy will never be allowed.