Taking it to the people : individual shareholder participation in Australian companies and the election of directors at Coles Myer

Abstract

The often portrayed image of company shareholders as passive and powerless (Deetz, 1992) was challenged recently in Australia through the contested electrons for directorships in Coles Myer Limited. Long-standing Board member, Solomon Lew, ran a major public relations campaign to motivate shareholders to support his re-election by voting at the annual general meeting, thereby demonstrating the power of the individual shareholder in organisational decision-making. Following predictions of greater shareholder activism (Dunlop, 1998; Smith, 1998) and a strong emphasis on corporate governance by world regulators, the role that shareholders do and could play in the companies in which they invest needs to be considered.

This paper first reports on a study of how listed companies understand individual and institutional shareholder participation. Interview data and document analysis from seven Australian publicly listed companies demonstrate how a company's understanding of the role of the shareholder influences its view on, and support of, shareholder participation, and how the company views shareholder activism. These views are then considered in light of the participation issues raised in the Coles Myer case. Recognising that the forces flowing from surface and deep power structures (Frost, 1987) govern company-shareholder relationships, this paper examines the ability of shareholders, and the reticence demonstrated by listed companies, to challenge the status quo.