It is time for shareholders to start behaving like the owners of listed companies rather than appearing as hapless bystanders as corporate disasters unfold around them.
In the U.S., the SEC move to allow institutional investors to nominate directors is a small but welcome step in the right direction. To some degree it echoes existing arrangements in Sweden, where shareholders already play a greater role in nominating and approving directors.
But a more fundamental power shift in favor of the owners of publicly quoted companies is urgently needed and the big question is whether institutional investors, chastened by the huge hits they’ve taken as their investments in companies have crumbled, have got the will and the wherewithal to redefine their relationship with the firms they own.
If past performance is any indication of future performance — which thankfully as fund managers’ disclaimers remind us, it is not — the omens are not good.