Bob Monks Delivers Lecture on Shareholder Activism

Robert Monks, a legendary shareholder activist and founder of ISS (which was later acquired by RiskMetrics) and the Corporate Library, recently gave a talk as part of the Shareholder Activism course here at Harvard Law School about the past, the present, and the future of shareholder activism.

Mr. Monks began his talk by emphasizing the importance of shareholders. He noted that in the absence of having an informed, motivated and powerful counter force to management, the corporation will always have the problem of autocrat who is answerable to no-one. The capital markets generate tremendous wealth. The key issue is who is entitled to this wealth.

Mr. Monks discussed his past experience with Sears Roebuck, where he submitted himself as a nominee for director, and Exxon Mobil, where he filed proposals to separate the chairman and CEO roles. Throughout this discussion, he noted that the current system is in need of serious reform, in part because of the asymmetry of resources available to the company compared with the activist shareholder. Mr. Monks also discussed his proposal for a mandatory rule that gives 5% of the shareholders the right to call a special meeting at which a majority of the shareholders present can remove any or all of directors with or without cause.

The student questions covered a broad range of topics, from whether increased litigation would lead to more activism or more reliance on ISS voting guidelines, to the desirability of government versus private sector employment.

Background materials about Mr. Monks and his talk are available here. A video of the talk is available here (Quicktime .mov format).  (video no longer available)