Missing in Activism: Retail Investor Absence in Corporate Elections

Abstract

Shareholder-led campaigns to install new leadership at U.S. firms — so-called proxy contests — occur too rarely and, when they do occur, are led by the same, boring cast of characters too often. This Article presents empirical evidence from a hand-collected database of public filings of proxy statements from 2006, 2007, and 2008, the years public filings are available from the SEC electronic filing system. In short, the data suggest that the system of contested corporate elections is broken and, from there, the Article points the way toward legal reform. When it comes to the interests of retail investors — i.e., individuals with small stakes in a particular firm — the evidence suggests that contested corporate elections are virtually off-limits as conduit for activism. Retail investors almost never launch a campaign and their interests are not represented well by those who do.