INTRODUCTION You Have More Power Than You Think

The world is out of balance. Modern society is faced with enormous challenges—the highest levels of income disparity in modern times; abusive labor conditions; toxins in our water supply; pollution of air, sea, and land; climate change threatening our future; and rampant corruption. The big question is, who’s in control?

The answer is corporations. Taken in aggregate, corporate power is greater than that of governments, religions, and civil society. Corporations are the most powerful entities on the planet, and in the United States they now have rights as “people” to make unlimited political contributions to gain even more influence.

Yet, these same publicly traded corporations are, by design, beholden to their shareholders, people like you and me. We have the power to change these companies. We are the owners. In fact an estimated 48 percent of adult Americans or approximately 91 million people have some ownership stake in public companies either as part of a fund or in individual stocks.

However, the vast majority of us abdicate our power or are simply not aware that we possess it in the first place.

While you may believe that there is nothing that you can do, the exact opposite is true. One individual can make enormous change. And by teaming up with other like-minded investors, you can magnify your impact. You have rights and much more influence than you think to help the corporations that you have ownership in become responsible to their employees, customers, communities, and the planet. By doing so, they can also become more profitable.

As an owner of even one share of stock, you have the right to vote on critical issues, elect the board of directors, and weigh in on CEO pay at nearly every annual meeting through your proxy, which is the company’s ballot of issues for shareholders to vote on.

You can take direct action by engaging corporate managers and executives. If it’s a US company and you own as little as $2,000 in stock for one year, you can file a shareholder resolution asking for disclosure or a shift in corporate behavior on environmental, social, and governance policies.

As the owner of shares in mutual funds or exchange-traded funds or a contributor to a pension fund, you have rights to lobby your fund managers to demand that they vote and engage the companies that they own on your behalf.

At many companies, if you are part of a coalition of investors owning three percent of the stock for three years, you recently gained the right to nominate a board candidate of your choosing that the company must place on the annual proxy for a shareholder vote.

If change is not happening fast enough or in a credible way, you can make a powerful public statement by divesting your holdings. This sends the message that these companies are not acting in the best interest of long term shareholders, are creating significant financial risk, or are causing unacceptable harm to people or the environment.

You may have heard the term shareholder activism before. It can refer to at least two kinds of corporate engagement, with very different motivations and outcomes. Often shareholder activism refers to a major shareholder or group of shareholders seeking to use its influence solely for its own economic gain by using the proxy process to change management or board members, or for a hostile takeover of a company. Examples of this kind of shareholder campaign include AOL’s takeover of Time Warner or Carl Icahn’s attempt to take over Clorox. That’s not what this book is about.

We prefer to call the process of positive engagement on environmental, social, and governance (ESG) issues shareholder advocacy. The intent is to use the power of share ownership to improve the company’s reputation and long-term financial success by enhancing ESG practices and policies. These actions are seen as a collaboration with the company, not an intent to intimidate or take over the company. To make things a bit more complicated, though, it’s also true that some of the governance or G in ESG can focus more on economic than social performance, as when a large pension fund seeks votes on CEO pay or to try to replace an underperforming board member. Both activism and advocacy can overlap in the use of a tactic, but the intent and outcome are very different.

The Shareholder Action Guide offers practical ways to help you unleash your hidden powers to hold publicly traded corporations accountable. Shareholder advocates interviewed in these pages have forced the tobacco giant RJR to cease marketing Camel cigarettes to children, been instrumental in halting the clear-cutting of old-growth forests, worked to end abusive labor practices, pushed fracking companies to disclose the harmful environmental impact of their practices, and gotten rid of underqualified corporate board members, to name just a few of their accomplishments.

This book provides the tools and knowledge to become an empowered shareholder and push for these kinds of changes yourself. It instructs how to enlist allies and advocates to fight for the changes you desire and how to use new tools to assist you as you peer through the veils of obfuscation that mask corporate policies and action.

The challenge is great; US-based corporations comprising the Fortune 500 earn tens of trillions in gross revenues each year. In the United States, there are about 3,700 companies actively traded on the New York Stock Exchange and NASDAQ. Along with all that money comes tremendous political power.

Shareholders not only have strength in numbers, but the legal right and the moral obligation to exert their influence. We have had this right since the 1930s and used it successfully thousands of times. Today we have resources at our fingertips that, even a few years ago, were available only to elite financial managers. The online research tools detailed in this book give us the ability to know what holdings are embedded in our retirement funds and learn about corporate assets, officers, and their actions (and inactions) with unprecedented ease. Social media platforms give us the ability to communicate instantly on a global scale at virtually no cost. Together, these tools give us the power to band together as never before and bring about positive and lasting change.

We have entered an era in which shareholders can and must shoulder their responsibility and unleash their power. This is no time to sit back helplessly and say, “But there is nothing I can do.” Now is the time to join the global movement of shareholder advocates and take action to shape the world into the just and sustainable future that we desire.