Shareholder activism, which its proponents say is intended to make corporations more accountable, ethical, profitable and transparent, is “threatening the future of American business.”
So argues Martin Lipton, founding partner of the New York-based law firm of Wachtell, Lipton, Rosen & Katz, in a scathing article in The Conference Board Review. “Activism, and the corporate governance changes it has brought about,” he argues, “have caused a shift in the board’s role from guiding strategy and advising management to ensuring compliance and performing due diligence.”
He also says that new governance rules, along with the threat of personal liability, are forcing board members to spend less of their time trying to help companies improve.
Mr. Lipton adds that “shareholder litigation against directors has grown to be a big business and a type of extortion.”
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