Corporate Governance 
DECEMBER 2005

The Shareholder Activism Handbook, by Jay Eisenhofer and Michael Barry is the most comprehensive guide to shareholder activism that I have ever seen. Yes, the book provides a fairly comprehensive chapter on filing shareholder resolutions - discussing the history and evolution of rule 14a-8, how to file, what types of resolutions can be excluded, no action letters, cases, proxy solicitation, communications between shareholders, bylaws amendments, etc. Yet, that's only one chapter out of 16.

The book starts with an analytical overview…a chapter on the principles of corporate governance, which discusses the concept of corporate governance and provides an overview of research linking good corporate governance to increased share price. Other chapters discuss the balance of power between owners and management as well the history of shareholder activism.

The Handbook then quickly get into the nuts and bolts of creating a shareholder-run corporate governance program, which covers many of the issues a mutual or pension fund would need to address - everything from screening, targeting, contacting, to issuing press releases, a more comprehensive section on the benefits of improved corporate governance, as well as anticipated costs. Chapter 5 discusses contacts with management and board. Chapter 6 deals with the rights of shareholders to inspect books and records, “proper purpose,” the “scope” of inspection, confidentiality, privilege, etc. and provides a handy table of legislation by state.

Chapter 8 surveys annual meeting requirements by state and discusses procedural norms regarding conduct of the meeting as well as recent developments, many of which will be somewhat familiar to readers of CorpGov.Net. For example, we covered Sempra Energy's decision to hold its shareholder meeting in London. While shareholders in the California-based company could cast ballots by mail, those with resolutions on the ballot were required to attend in person or have someone else speak on their behalf. Activists like John Chevedden, who had two measures, really had to scramble. Another issue covered by the Handbook is the “virtual meeting,” which have not yet caught on as some of us feared.

Chapter 9 discusses shareholder voting rights, including broker votes, judicial review of elections, ESOPs, vote no campaigns, and the recent movement for majority requirements for election. Additional chapters cover mergers and tender offers, appraisal rights, derivative actions, direct actions, the history of claims under the securities acts, serving as lead plaintiff, and bondholder rights.

The best book in this category up until now has been Craig MacKenzie's The Shareholder Action Handbook: Using Shares to Make Companies Accountable, and that was published in 1993. While it isn't likely to level the corporate governance playing field, active shareholders, legal counsel, consultants and fund managers will find themselves referring to the Shareholder Activism Handbook over and over again. The looseleaf format and automatic supplementation promise to keep the volume current.