Sarbones-Oxley Compliance Journal
NOVEMBER 11, 2005

Corporate shareholders seeking to have a greater voice at the companies they invest in have a new ally: the Shareholder Activism Handbook, just issued by Aspen Publishers.

The book, authored by leading shareholder attorneys Jay Eisenhofer and Michael Barry of Grant & Eisenhofer P.A., is the first comprehensive guide to all aspects of shareholder activism, from jawboning management about investor concerns to shareholder resolutions, proxy contests, and litigation.

The new handbook is both a broad overview of the history and basis for shareholder activism, as well as a nuts-and-bolts manual for investors in obtaining greater influence in corporate affairs. As shareholder involvement has grown into an international movement in recent years, there is growing evidence that activism and better corporate governance increases overall investment returns.

The handbook is a plain-English treatise, intended as a user-friendly guide for those seeking a better working grasp of corporate governance, shareholder communications and securities litigation.

It couldn’t come at a more à propos time – when shareholders in the U.S. and abroad have become fatigued by corporate fraud, but also frustrated by management and directors over a host of governance issues, including executive compensation, board independence and board access.

In 16 well-documented chapters, authors Eisenhofer and Barry lay out the case for shareholder activism, including advice for investors looking to establish an effective corporate governance program. Other chapters address such issues as books and records requests; shareholder resolutions and voting rights; merger and tender offers; appraisal rights; even the ins and outs of an annual meeting.

There is also extensive discussion of securities litigation, including derivative shareholder actions, class actions, and the role of the lead plaintiff. The book addresses claims under a variety of federal securities laws as well.

“We’ve been fighting for shareholder rights on behalf of institutional investors since our firm was established in 1997,” said Jay Eisenhofer, co-author and name partner at Grant & Eisenhofer. “One thing echoing through that experience is that the balance of power is always tipped in favor of the corporation.

“That’s why we felt compelled to write this book,” he continued. “Our hope is that by fully explaining the fundamental rights of company stakeholders – bondholders as well as equityholders – we have taken a major step in leveling the playing field on corporate governance.”

While many treatments take an academic view of securities or corporate law and have touched upon isolated aspects of shareholder activism (such as proxy fights), the Shareholder Activism Handbook is written from the perspective of the shareholder. The book provides a roadmap on how to safeguard or enforce shareholder rights in the pursuit of better investment returns.

The Shareholder Activism Handbook answers important questions for investors, including fund managers, plan sponsors, as well as individual shareholders.

• How can I develop a corporate governance program, and is it worth the investment?

• How can I communicate with other shareholders about obtaining access to corporate materials?

• What are the requirements for bringing a derivative or class action as a shareholder?

• My corporation is merging and I’m unhappy about the terms – how can I exercise dissenter’s rights?

• What are my rights at the annual meeting?

• The value of my stock has collapsed amid disclosures of accounting fraud; what are my rights?

For the legal practitioner, the book is a primary source tool, to be used as a first stop in understanding the fundamentals of representation when shareholder disputes arise. The authors take time to:

• Provide background on the balance of power between shareholders and management.

• Discuss shareholder voting rights.

• Give background on the activist investor’s role in corporate litigation.

• Explain the role of the “lead plaintiff” in securities litigation and how it enhances recoveries.

• Address the unique rights of bondholders.

“We felt strongly about demystifying some of the complexities of corporate law for shareholders,” said co-author and Grant & Eisenhofer partner Michael Barry. “That’s why the book is written in such a straightforward fashion.

We also think it enhances understanding to place legal issues in context, which is why the book examines the history of the activist movement, as well as the nitty gritty on basic strategy for shareholders, such as how they can best communicate with each other.”

Grant & Eisenhofer has emerged in recent years as among the leading shareholder firms in the country. In October, the firm was selected as one of the top 12 plaintiff’s law firms in the country by The National Law Journal.

Also this year, Treasury and Risk Management magazine named Jay Eisenhofer one of the “100 Most Influential People in Finance,” calling him a “relentless reformer,” and Grant & Eisenhofer “long-time practitioners of cutting-edge litigation with corporate governance bent.”

The firm has obtained five of the largest recoveries since the enactment of the Private Securities Litigation Reform Act of 1995, securing more than $2 billion in aggregate recoveries. Earlier this year, Stuart Grant, a founding partner of the firm, won a total of $284 million following a seven-week jury trial against former senior executives of Safety-Kleen Corp.

G&E clients include some of the largest institutional investors in the country, such as the California Public Employees’ Retirement System, the Teachers Retirement System of Louisiana, the New York City Pension Funds and the Ohio Public Employees Retirement System. The firm is currently lead counsel in securities class actions against Tyco, Marsh McLennan, Global Crossing and Parmalat, to name a few.

With offices in Wilmington, Del. and more recently, New York, Grant & Eisenhofer has made a national impact. The firm’s results have included record settlements paid from the individual corporate officers, as well as ground-breaking, corporate governance reforms.

Mr. Eisenhofer is a graduate of Villanova University School of Law, where he was a member of the Order of the Coif. In addition to Shareholder Activism Handbook, Mr. Eisenhofer has written and lectured widely on securities fraud and insurance coverage litigation, business and employment torts, directors’ and officers’ liability coverage, and the Delaware law of shareholder rights and directorial responsibilities.

His articles have appeared in such publications as Pensions & Investments, Business Lawyer, Bank and Corporate Governance Law Reporter, Securities Reform Act Litigation Reporter, Securities Regulation & Law, Corporate Governance Advisor, Delaware Law Weekly, The NAPPA Report, and Corporate Governance Advisor.

Mr. Barry earned his J.D. from the University of Pittsburgh School of Law, where he was an executive editor of The University of Pittsburgh Law Review and a member of the Order of the Coif. Mr. Barry is currently part of the Grant & Eisenhofer teams litigating securities claims arising from the collapse of Global Crossing Ltd. and Qwest Communications International, Inc.