A:

Investors in publicly traded firms can influence C-suite executives by exercising voting rights or engaging in investor activism. Common shareholders have the right to vote in board member elections and can also cast votes on certain events, such as mergers or liquidation. Shareholder activism is another method that can include publicity campaigns, open letters to management or shareholder resolutions.

Shareholders of public corporations have the power to elect directors. Shareholders cast votes at annual or special shareholder meetings, and investors can also legally cast votes through proxies. Directors on the board have a legal obligation to act as fiduciaries representing the shareholders' best interests. Appointment and dismissal of chief executives are among the board's duties. Investors can therefore indirectly influence the C-suite through voting rights.

Corporate activism is a broad term that includes several shareholder strategies. If large investors or a group of investors are unhappy with corporate management, they can initiate a campaign to elect new board members whose decisions will represent the activists more closely. This tactic, called a proxy fight, often results in changes to the C-suite roster. The CEO of Bob Evans resigned in December 2014 when activist investors applied pressure to the incumbent board through a proxy battle.

Activists can also bring proposals to vote through shareholder resolutions. These proposals typically relate to corporate governance or sustainability measures. In other cases, activists use public appeals to rally support for their causes. These appeals can include open letters to the investor community and management as well as publicity campaigns through social media and other media. Well-known activist investor Carl Icahn campaigned publicly for Apple to repurchase shares in late 2014. Apple's CEO was forced to address these proposals.

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RELATED TERMS
  1. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  2. Shareholder Activist

    A person who attempts to use his or her rights as a shareholder ...
  3. Statutory Voting

    A corporate voting procedure in which each shareholder is entitled ...
  4. Cumulative Voting

    The procedure of voting for a company's directors; each shareholder ...
  5. Corporate Governance

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  6. Controlling Interest

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