A Tug of War
The war between boards of directors and shareholders has been raging for years, heating up and cooling down based on success or failure, evolving goals and opportunities, and opponents' actions. Some might not see it as a war, instead viewing the respective roles of boards and shareholders as continuing to evolve and mature with the common purpose of enhancing share value. Probably both viewpoints are accurate, depending on one's perspective and where we are in a business cycle.
I've learned that speaking or writing about this topic is like stepping into a mine field. Knowledgeable people have strong feelings, and discussing it is like talking politics in what's supposed to be a relaxed social setting, with a high risk of igniting fireworks. Nonetheless, it's worth looking at these issues and finding out where all participants potentially can benefit.
Without getting into the long history of how power has been shared over time between shareholders, boards, and managements, suffice it to say that shareholders are the owners of a corporation, the board hires and oversees management, and management manages. Pretty simple, right? Well, it's simple as long as everything goes well. But when shareholders see what they believe to be bad things happening to their companies, they want to see action taken. Which brings us to the question of just how much a company's owners can and should be able to direct or influence what happens—including the ability to grab directors by the ...