The news is bittersweet: Shareholders have come a long way,
but one of the key organizations that helped individual
stockholders exercise their rights is about to fold its tent.
The United Shareholders Association (USA), which has battled
for improved shareholder rights for the past seven years, will
disband at year end, said Ralph Whitworth, the group's president.
The group's mission _ to reform shareholder proxy rules and stir
national debate on shareholder rights _ has been 90 percent
accomplished, Whitworth said.
"We saw ourselves as catalysts. We wanted to set goals, take
action, get things done and then move on," said Whitworth. "We
could stay around as a watchdog group. But the only method we can
use is harassment _ embarrass our targets in the media. And we
don't see ourselves nipping at the heels of Corporate America
indefinitely. That isn't constructive and it was never our
To be sure, shareholders have won significant victories in the
past seven years. However, small shareholders still have a long
way to go. And experts believe it may be rough sledding without
"This is a real blow to us," said Nell Minow, principal of
Lens Inc., a Washington, D.C.-based investment company. "Even
institutional investors often relied on initiatives sponsored by
USA to get their message across. This really leaves a void."
To understand what USA accomplished and what remains to be
done requires a bit of explanation.
When United Shareholders was founded in 1986, Wall Street was
in the throes of takeover mania. And T. Boone Pickens, USA's
founder, was in the thick of the activity, making hostile runs
for Gulf Oil, Unocal, Diamond Shamrock and others.
Where some shareholders won by getting premium prices for
their stock, company managers often got ousted when takeovers
were successful. As a result, some responded to the takeover
threat by creating:
"Golden parachutes," which pay managers huge sums to quit.
Staggered boards, where only a few directors can be ousted each
"Poison pills," that sabotaged bidders who came in without
Many corporations still employ these tactics.
But the most troubling trend was something called staggered
voting rights, which reduced the voting rights of common
shareholders and increased the voting power of a handful of
company insiders. That was done by creating two classes of stock.
But one class had several times the voting power of the other.
United Shareholders commissioned studies that revealed the
negative effect of these corporate changes and launched a massive
letter-writing campaign that ultimately resulted in an SEC
prohibition against exchange offers for stock with different
voting rights. …