What moves activists are CEOs, not proxy cards

Investors in American companies have a new way of intervening in corporate affairs. Changes in the way of voting for directors begin on Thursday, and it is likely that more companies will be the target of the bullies, sometimes with absurd demands. Still, managers who do their jobs well have little to worry about.

Previously, when an activist proposed alternate directors for election at the company’s shareholders’ meeting, they had to send investors a separate voting card listing only their nominees. The new rules, approved last year by the US Securities and Exchange Commission, say companies must list dissenting candidates on the same ballot as their own. Shareholders will no longer have to choose between one group or another.

Campaigning against a company’s board of directors can be cheaper now. Activists won’t have to work as hard to get shareholders to pay attention to them, and many have noted that it might be easier for shareholders to nominate a candidate for the board of directors. But the change can be subtle. Many companies already allow shareholders who have been in office for more than three years to propose a director for their election, but it is something that is hardly used.

It’s good that shareholders have more freedom to express their preferences, something even dissenting SEC commissioner Hester Peirce supported in November. But a campaign is only as strong as the suggestions made by a grumpy activist. Suggestions will only resonate with other shareholders if they, too, are disappointed with the company’s results, and in particular with what the CEO has done.

Even the most stubborn activists have struggled with campaigns that were more ado than nut. Carl Icahn failed earlier this year in his attempt to shake up the fast-food chain McDonald’s. His complaints about the treatment of pigs were not echoed, but also the results of McDonald’s against its competitors were not bad enough to make that battle worthwhile.

The heads of the companies are overflowing with challenges. The rise in interest rates makes financing more expensive, the workforce is restless and the global economic situation remains unstable. But shareholders should be able to distinguish between a bad market and bad management. Even with universal voting, managers who are doing it flawlessly will find their control more secure than ever.