tdaxp

Since the 1970s, social and environmental activists have used proxy voting and public companies' annual shareholder meetings as a platform to push for new public policies. The early shareholder activist and "socially responsible" investment movements achieved their most significant victory in the 1980s, when heavy pressure forced major U.S. and European multinationals to withdraw from South Africa and contributed significantly to the end of the apartheid regime. By the end of the apartheid era, few major multinationals dared do business in South Africa lest they be seen as endorsing its racist political, social and economic structure.

Shareholder activism does not depend on gaining the support of the majority of a company's shareholders in order to be effective -- proxy votes are nonbinding. Instead, it changes corporate policy when management sees that a strong minority of shareholders (usually 20 percent will do) find the company's policies troublesome. Senior executives begin to fear that significant amounts of management's time, energy and attention will be diverted to addressing the issue. To reach that threshold of effectiveness, activists try to recruit the support of as many large shareholders as possible -- beginning with small social-oriented firms such as Calvert, then progressing to socially-oriented pension funds such as CalPERS (and potentially TIAA-CREF, if the demonstrators get their way). Still, most successful campaigns need significant rank-and-file shareholder support and that of at least one major mainstream investor.

• Major Benefit of Shareholder Activism for 5GW: SecretWarrior can affect change through publicly inoccuous front organizations
• Major Detriment of Shareholder Activism for 5GW: Relies on visibility of front groups to be effective, requires "hearts and minds"
  

Of course, shareholder activism can also be used in netwars, or 4th Generation Wars. Indeed, shareholder activism may help 4GWarriors more than 5GWarriors. But such is a post for another time...