Dear Chairman: Boardroom battles and the rise of shareholder activism, a new book that traces the history of investor dissent since the 1920s and documents what happens when shareholders and management collide, has been released today
When BP shareholders rejected a pay package of almost £14m for chief executive Bob Dudley in the spring, IoD director general Simon Walker said the rebellion would “determine the future of corporate governance in the UK”. Walker’s criticism of exorbitant executive pay has marked his five-year tenure at the helm of the organisation, but a new book is set to turn the spotlight on a whole century of the tensions that can arise between directors, managers and shareholders. Written by Jeff Gramm, a hedge-fund manager and adjunct professor at Columbia Business School, Dear Chairman: Boardroom battles and the rise of shareholder activism (released today) traces the history of investor dissent from the 1920s to today. It includes unpublished original letters from Wall Street icons including Benjamin Graham, Warren Buffett and Daniel Loeb, as well as examples of shareholder activism at its very worst.
Dear Chairman: Boardroom battles and the rise of shareholder activism – what the publisher says
Combining sharp analysis and compelling narrative with original letters from Wall Street icons-including Benjamin Graham, Warren Buffett, Ross Perot, Carl Icahn, and Bill Ackman – this essential book traces the history of one of capitalism’s longest running tensions: the battle between what the management of public companies wants and what its shareholders think is best for them.
Beginning in the 1920s, Dear Chairman traces the rise, for better and for worse, of shareholder activism over the course of almost a century, and provides an invaluable-and unprecedented-perspective on what it actually means to be a public company. Mixing never-before-published letters from the major players themselves with illuminating storytelling, each chapter looks at a different era from the last century and reveals what caused shareholders and management to collide. Through the book, readers will gain a better understanding of what public companies are, how they work, and who is really in control.
As a founder of a small hedge fund and an adjunct professor at Columbia Business School, Jeff Gramm comes at this subject from a unique angle. In order for his fund’s strategy to work, he needs to spend as much time evaluating CEOs and directors as he does trying to understand and value businesses, an experience he has found disheartening. He has seen public companies that are poorly governed at best, and wilfully screw their shareholders at worst. As a professor teaching a course on value investing, he doesn’t assign a textbook or use outside readings; instead, he asks his students read the very same letters featured in this book. These letters reveal so much: how investors interact with directors and managers, how they think about their target companies, and how they plan to profit. Each is a fascinating example of capitalism at work through the voices of its most colourful, influential participants.
Dear Chairman is not, however, a one-sided tribute to the ingenuity of public company investors. It also discusses shareholder activism at its very worst, when hedge funds engineer stealthy land-grabs at the expense of a company’s long term prospects. More than anything else, it’s vital that everyone understands the public company/shareholder relationship better. Dear Chairman accomplishes this goal in a fresh, entertaining way.