FROM APATHY TO ACTIVISM: THE EMERGENCE, IMPACT, AND FUTURE OF SHAREHOLDER ACTIVISM AS THE NEW CORPORATE GOVERNANCE NORM

The conventional and long-held view that public company shareholders are, and should be, rationally apathetic is waning. Today, public company shareholders are active. Such shareholders have actively sought to increase their voting power and influence over director elections and other important corporate matters. These shareholders not only have been voting, but they also have been voting against management preferences. Moreover, public company shareholders increasingly have begun to request, and in some instances demand, that corporate officers and directors engage with them around a range of issues. The shift away from shareholder apathy reflects a radical departure from the traditional corporate governance norm of shareholder passivity. While many corporate governance experts have conceded the descriptive shift away from shareholder apathy (at least temporarily), few have acknowledged the normative shift and its related significance. This Article acknowledges that shift, and in so doing advances three important claims related to shareholders and the corporate governance landscape. First, this Article maintains that increased shareholder activism reflects a considerable descriptive shift in the manner in which shareholders use their voting power to engage with the corporation. Second, and more importantly, this Article asserts that such increased activism reflects a normative shift pursuant to which shareholders, corporate officers, and directors have come to believe that shareholder activism is normatively appropriate, at least to a certain extent and for certain shareholders. In light of the long-held belief in the viability and validity of shareholder apathy, this shift is remarkable. Third, this Article argues that, even if efforts to scale back shareholder activism gain some traction, those efforts will prove challenging and may be doomed to failure because of the normative shift embracing shareholder activism as an appropriate element of corporate governance. In these ways, this Article argues that shareholder activism is the new corporate governance norm and, as a consequence, corporations, officers, directors, shareholders, and regulators must both acknowledge and account for that norm.