1. Shareholder Activism

2. Roster Why Shareholder activism Objectives of Shareholder activism
What Shareholder Activism Can Do?
Global Phenomena
Evolving eco system

3. What is Shareholder Activism
Shareholder activism is a way in which shareholders can influence a corporation's behaviour by exercising their rights as owners. Although shareholders don't run a company, there are ways for them to influence the board of directors and management. These can range from dialogue with management to voice their concerns about a particular issue to formal proposals that are voted on by all shareholders at a company's annual meetings.

4. Why Shareholder Activism
Minority shareholders are not protected
Expropriation of minority shareholders
No independent director and auditor
Lack of monitoring function in the company
Agency problem & moral hazard of management
Shareholder’s value is ignored
Controlling shareholder or managements are involved in self-dealing
Nepotism in the management
Weak enforcement of laws & regulations
Laws are sleeping in the book
Market monitoring function is weak
Institutional investors are passive due to conflict of interest
Government can not do everything

5. Why Shareholder Activism
Poor Corporate Governance Practices
Company assets are siphoned for the family
Illegal or unfair related party transactions
Cross debt guarantee, hidden debt
Sales and purchases among affiliated companies
Financial subsidies for related parties: Loan
No Transparency & No Accountability
Disclosures and auditor’s reports are not credible
Controlling family and management are not accounted for mis- management
Poor corporate governance creates corruptions
Improving corporate governance is one of effective way to fight against corruption in the society

6. Objectives of Shareholder Activism
Independent Watchdog on the Management
Protect Shareholder’s Value
Stop profit-siphoning management practice
Stop subsidies to affiliated companies
Stop illegal intra-group transactions
Ensure Transparency & Accountability
Independent management from controlling shareholder
Outside directors representing minority shareholders
Fights against Corruptions

7. Aspects of shareholder activism
Proxy voting
Dialogue
Resolutions
Divestment

8. Shareholder Activism Shareholder activism can be exercised through
Proxy battles
Publicity campaigns
Shareholder resolutions
Litigation and
Negotiations with management

9. Proxy Voting
A proxy vote is when a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote. This is referred to also as a proxy battle. Used mainly in the context of takeovers, this term means the acquirer will persuade existing shareholders to vote out company management so that the company will be easier to take over.

10. Proxy Voting
When shareholders are dissatisfied with a specific aspect of a company, they may attempt to change it. This may result in resistance from the company’s board of directors (BOD). The dissatisfied shareholders try persuading other shareholders to let them use their proxy votes for proposed changes to the company's board members. The shareholders try removing board members opposing their desired changes and installing their own candidates. The new board members are typically more receptive to shareholders' proposed changes, making it easier to implement them. The company may move in a new direction, as decided by the BOD and shareholders.

12. What Shareholder Activism Can Do?
Monitoring and reporting corporate activities
Constructive talks with management before taking actions
Exercise shareholder rights
Attending shareholder meetings
Proposing agenda at the shareholders meetings
Electing directors
Proposing outside director candidate
Proxy fights
Taking legal actions
Filing civil lawsuit: Derivative actions, Class-Actions
Filing criminal investigation
Proposing and lobbying for legislation

13. Global Phenomena
Cognizant, minority shareholders in dispute over Board
Los Angeles County Employee Retirement Association or Lacera - to make it mandatory for all board directors to be elected annually
John Chevedden has forced Cognizant to introduce a proposal to empower investors with significant ownership to call for a special shareholder meeting
Shareholders reject Citi CEO Vikram Pandit’s $ 15 million compensation package in non-binding vote.