... and that possibly means you, as well.
Last week saw a major global business humbled, with a shareholder revolt giving the board of directors a bloody nose.
And no, I'm not talking about the annual general meeting (AGM) at FTSE 100 stalwart Barclays (LSE: BARC), where shareholders expressed angry disapproval of a snouts-in-the-trough policy that saw the business awarding £2.15 billion in bonuses last year, while paying out just £730 million in dividends.
Instead, I'm referring to General Electric (NASDAQ: GE.US), an industry icon that under former boss Jack Welch came to epitomise everything that was admirable about American business.
Alas, under present chief executive Jeffrey Immelt, the shine has rather come off the company, with its shares falling by 45% over the past five years, versus a 7% drop in the S&P 500 index.
And last week, shareholders kicked back, angrily voting against a whole swathe of resolutions. No fewer than 47.5% of the votes cast were in favour of a motion -- opposed by the board -- that would have given shareholders more direct control over the business.
It's your company
All of which handily serves to underline a message that many investors overlook. And it's this: it's they, and not the board, who own the business that they hold shares in.
Indeed, the board is supposed to represent the interests of those shareholders, and its members are elected by shareholders.
And interestingly, at both General Electric and Barclays, significant numbers of votes were cast opposing the re-election of particular directors. At GE, for instance, long-time board member Roger Penske attracted shareholders' ire. At Barclays, it was the re-election of Alison Carnwath, head of the remuneration committee, that drew their wrath, with more than one in five votes opposing her re-joining the board.
Nor was it just GE and Barclays that prompted shareholders' anger last week. While Barclays shareholders were heckling and booing chairman Marcus Agius, over at the Credit Suisse AGM, shareholder Rudolf Weber was also expressing angry dissatisfaction.
"You should be ashamed of yourselves for taking so much money away from us. We are the owners of this bank, and you are our employees. We should be the ones who decide what you earn," he told the board, to applause from other shareholders.
Diff'rent strokes
While angry AGMs are the exception, shareholder activism is nothing new -- although, at present, it does seem to be on the rise.
Often, though, it takes place behind closed doors, with major institutional investors expressing their unhappiness to senior non-executive directors, who then pass on those views to the rest of the board.
Just such a conversation, for instance, will doubtless have precipitated the departure of chief executive David Brennan from FTSE 100 AstraZeneca (LSE: AZN). It's possible, too, to see behind-the-scenes activism at work in the post-Gulf of Mexico departure of former chief executive Tony Hayward from BP (LSE: BP), just as in the case of former BP boss Bob Horton, 20 years before.
And it doesn't have to be high-profile businesses like BP and AstraZeneca where shareholder activism seeks changes in the way that businesses are run.
Here at the Motley Fool, for instance, shareholder action groups repeatedly put pressure on businesses. Indeed, two of our more well-known discussion board posters -- carmensfella and paulypilot -- have quite a track record.
The redoubtable carmensfella, for instance, has regularly reported on developments at Tandem (LSE: TND), a Midlands‑based bicycle business. More recently, he's brought activity at Lees Foods (LSE: LEE) to Fools' attention. Events at the Conygar Investment Company (LSE: CIC) have also stirred Fools into action. And so on.
Profit from change
Now, some shareholder activism is unabashed self-interest. Take a stake, shake up the board and the business, create a rise in the share price -- and sell out, taking a healthy profit.
Over at Alliance Trust (LSE: ATST), for instance, I imagine that this is the sort of plan that Colin Kingsnorth, head of Laxey Partners, has in mind. He certainly didn't give an impression to the contrary when I spoke to him, and -- as Alliance's own AGM recently made clear -- a significant number of shareholders agree with him.
Other shareholders seek change for other motives. Long-term stakeholders, perhaps -- and wanting to stay long-term shareholders -- they nevertheless want to see a bigger share of the rewards going to shareholders, not directors. That's the kind of activism that is on show at Barclays, I reckon, with the anger of long-term ordinary shareholders being very apparent.
Speak out
The bottom line? No matter how big the company -- from AIM-listed minnows to FTSE 100 giants -- shareholders can precipitate change.
In short, if you don't like something, say so. And ideally, find a few fellow shareholders to rattle directors cages, too.
He avoided techs in the dotcom bubble and banks in the credit boom. But just where is dividend expert Neil Woodford investing today? All is revealed in this free Motley Fool report -- "8 Shares Held By Britain's Super Investor".
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> Malcolm owns shares in AstraZeneca and BP. He does not own shares in any other company mentioned in this article.
