February 16, 2006
Headline: Some Shareholders Motivated By Self-Interest
The passion for uniformity sometimes induces otherwise sane folks to utter astonishing words. Or so it seems with these comments captured in an article at Institutional Investor about shareholder friendly corporations.
First, the author of the article:
"The presence of some unsatisfied owners at companies otherwise deemed the most friendly to shareholders highlights a growing concern among some institutional investors about the new wave of shareholder activists. There is no one-size-fits-all approach to governance that will ensure that a company is seen as shareholder-friendly, they caution. Although activists may be serving the greater good by drawing attention to corporate performance and governance, they may also prove to be more concerned about their own interests than with broader reforms."
Then an investment officer at Oppenheimer:
"There is a risk that some investors can become self-serving when they talk about governance. I don't think it's particularly shareholder-friendly if, for instance, a company does something at the insistence of the bondholders that disadvantages stockholders or that sacrifices long-term growth for short-term returns."
Then a law school professor:
"These folks are not interested in do-good reforms. Their goal is to make money."
So, let's recap. There's a growing concern among institutional investors about other investors who pursue their self-interest above the greater good. These might include bond holders whose self-interest differs from stockholders. Perhaps most troubling are those sharehoders who have a goal of making money.
From which, we learn that, evidently, money making forms no part of the goal of institutional investors, unless of course those institutional investors hold bonds instead of stocks -- or, perhaps those institutional investors represent or join in with other investors who are pursuing self-interest.
Sound confusing? Well, then, imagine the difficulties in trying to gain a ranking in Institutional Investor's survey of 'shareholder friendly' corporations. All of which recalls Rodney King's famous words put in this different context: "Come on, shareholders. Can't we all just get along?"