Despite the cold, calculated, corporate persona Wall Street projects, humanity is an indelible component of the business world. Probably the most essential ingredient.
Recognizing and understanding how human behavior drives decisions is a skill all shareholders need to hone.
Even corporations can be trained up with behavior modification (B-Mod) techniques. People make up companies, and their behavior and headsets can change. Management can be brought to task, and educated to think differently.
Shareholder activism and the role of the corporate gadfly can impact corporate behavioral change. The Nathan Cummings Foundation is dedicated to an economically and socially just society. The Foundation’s investment strategy pivots on the accountability of firms in which it invests. Cummings utilizes B-Mod techniques to modify corporate behavior.
In a 2010 white paper, “Changing Corporate Behavior through Shareholder Activism,” the Foundation goes on record. Just as of 2009, American foundations owned more than $583 billion dollars in assets. They are an investment force.
Nathan Cummings has been committed to pushing corporations to strengthen shareholder rights, improve governance, promote transparency, and focus on social and environmental issues.
Cummings employs tactics of engagement, and it encourages the “expression of voice” to bolster share value. Speaking to issues frankly, rather than abandoning them, ultimately increases company equity.
The Foundation fosters proactive conflict resolution and problem solving paradigms which underscore the fact that ‘we are all in this together.’ The foundation espouses a belief in active ownership and asset driven tools for change rather than just income-generating services or products.
Recently, the Cummings Foundation sponsored a shareholder proposal aimed to convince eBay to declassify their board of directors. Subsequently, a campaign was created which prompted more than a dozen other corporations to declassify their boards of directors. Classified boards serve set terms; longer terms are awarded to senior board members. Shareholder activists contend that classified boards breed complacency and ‘incestuous’ relations with management.
In 2011, Cummings launched a shareholder proposal at Goldman Sach’s Annual Meeting which focused on senior executive compensation. Pay and bonuses were felt to be excessive by virtue of the fact that earnings had dropped by 38%, and Goldman’s stock had deteriorated through the year.
The Foundation understands that change creates growth and in turn value. In effect, they are modifying corporate belief systems, and they have shown how this approach pays off.
This is most interesting as they are helping to change the ‘mentality’ of corporate culture from the inside out.
People are the company. The product or service is only a conduit. The consumer and investors need to believe that the company is righteous.
To contact Christopher Bayer directly, please email Christopher.Bayer@TheShareholderActivist.com.