Director-shareholder engagement may not advisable for every board for a number of legitimate reasons. But there is no question it is an emerging practice. Those who have engaged say it is worthwhile and can be a powerful strategy to strengthen shareholder relationships in an age of increasing investor activism.
Delaware courts often set standards for what corporations are permitted to do. In May, the Delaware Supreme Court ruled that a corporation's board of directors can unilaterally amend the company's bylaws to include a "loser pays" provision that shifts all litigation expenses to a plaintiff who sues the company for intra-corporate wrongdoing.
This Labor Day, working families do not have much to celebrate when it comes to wages and job security. But we can celebrate the fact that the deteriorating conditions of work are finally breaking through into broad political consciousness. Last week, the board of directors of Market Basket, one of the last of the independent supermarket chains, agreed to restore the fired CEO, Arthur T. Demoulas, who had treated workers decently rather than just milking the enterprise for dividends as another faction of this family-owned company has sought to do. An uprising by salaried managers and workers had brought the business to a halt. The Market Basket story is particularly instructive, because it represents how so-called shareholder capitalism puts pressure on managers to destroy job security and decent earnings for working people.
Visit an Urban Outfitters, Anthropologie or Free People clothing store, and you're likely to think, "They know their market." Yet Urban Outfitters, which owns all three stores, has leaders who are so out of touch that for years they have refused to have a policy to even consider having women and minorities on its board of directors.