At an annual shareholder meeting in 1990s for a major airline, Nell Minow remembers encountering Evelyn Y. Davis, the flamboyant corporate gadfly who died last Sunday at age 89 after decades as a theatrical but persistent thorn in the side of corporate executives.
“She was arguing with the staff there, and she felt very strongly that the mic for the Q&A session should be closer to her seat,” recalled Minow, a longtime shareholder advocate and adviser on corporate governance issues. Not only that, but “she wanted the CEO to move it personally,” she said. “And he did.”
The story is classic Davis, the Dutch American investor, Holocaust survivor, shareholder activist and publisher of an annual newsletter -- “Highlights and Lowlights of Annual Meetings” -- that secured her a White House press pass. She filed resolutions at many public corporations over the decades, and would show up at annual meetings not only to cajole and urge the board toward better corporate governance but at times, to flirt with the chief executive, and seemingly always, to draw attention to herself.
She told JPMorgan Chase CEO Jamie Dimon in 2010 that “you have to stay here forever,” wore a bathing suit in a 1970 General Motors meeting and, according to Automotive News, told former Ford CEO Alan Mulally that although he wasn’t bad-looking, “you should go back to Boeing, and we should have my king, Bill Ford, come back and be chairman and CEO again.”
In 2003, Bill Ford had personally delivered the keys to her new Jaguar to the Watergate complex in Washington where she lived. After, she said, “this is my secret, manipulating the male ego, playing one against the other," Bloomberg reported.
A gravestone she had installed years ago at Rock Creek Cemetery in Washington reads “Queen of the Corporate Jungle," and “I did not get where I am by standing in line, nor by being shy.” When The Washington Post profiled her in 2003, she suggested her own headline: “I Was Gifted With Both Extraordinary Beauty and Extraordinary Brains and I’ve Used Them Both to My Utmost Advantage.”
Like most shareholder activists, her proposals often didn’t win a majority of votes. But she was effective, winning a majority of votes at a 2006 Bank of New York meeting concerning how board members are elected, for example, and getting Bristol-Myers Squibb to adopt an annual election policy after years of pressure. In 1990, she got General Motors to ban inflated payments for shares and has been credited with influencing the U.S. Securities and Exchange Commission rules on executive pay disclosures, among other things.
Her focus on key issues like the quality of a board’s directors, shareholder voting processes, executive compensation, corporate legal bills and political contributions are still addressed by investors, said governance experts.
“She very, very early on identified these corporate governance problems in our largest companies and was a consistent advocate and, some would say, an irritant,” said Charles M. Elson, who leads a governance center at the University of Delaware. “The message she was promoting was really ahead of its time. What was considered to be pretty far out there [then] is not only mainstream today but in the dead center of mainstream.”
Her tactics, said Minow, “made it easy to dismiss the legitimacy of her points, which were usually excellent. The questions she raised were the same things investors are raising today.” Davis “really educated the shareholder community more than she educated the corporate community.”
The world of shareholder activism has shifted greatly since Davis began attending shareholder meetings in 1959. Today, discussions between shareholders and companies tend to happen more often behind the scenes or in less dramatic fashion, even as pension funds and other institutional investors take up some of the issues Davis promoted.
“Companies have started to be much less standoffish,” said Richard Clayton, research director at CtW Investment Group, an activist organization that works with union-sponsored pension funds. They have been "more engaging and more willing to make a change if they think the change is relatively modest and makes sense, and if that enables them to avoid a public controversy.”
Shareholder resolutions are often withdrawn if a company will adopt a change, and may never make it onto the ballot.
Still, the role of the individual investor as corporate gadfly is alive and well. According to data from Proxy Insight, individual filers such as John Chevedden and James McRitchie, along with others, were responsible for 200 shareholder proposals that made it onto corporate proxy statements so far in 2018, or 38 percent of the total. The average vote in support was 34 percent.
“They don’t wear clown noses at annual meetings and they don’t wear hot pants the way Evelyn did," Minow said, "but they’re slow and steady,” and their issues “gain support over time.”
In an email, McRitchie said that while Davis “used too many cringeworthy tactics, like pushing sales of her newsletter to CEOs and dressing like a crackpot,” she "did help push the envelope on issues like getting more boards declassified,” meaning directors would all be elected each year, rather than staggered over time.
“She won majority votes on that issue at 36 companies between 2001 and 2009 and perhaps many more before that timeframe," McRitchie said. "For that, we can all be grateful. Creating more democratic corporate governance is not and should not be something done just by old men in three-piece suits. Embrace diversity.”
Minow said that individual shareholder activists can lead on issues because large institutional investors -- particularly money-management firms -- “don’t always want to be out front.” When gadflies file the resolution, “it’s like a note in a bottle, you set it out there,” and bigger investors may eventually follow.
With the growth of money-management firms and institutional investors, and the influence of proxy advisers, there’s also more of a chance today for the ideas of individuals to be magnified, Elson said.
Elson, who knew Davis for years, said things were different during her heyday. “Her style was theatrical and in that era, for an individual, you had to be or no one paid attention,” he said. He recalls driving around running errands with his kids on Saturday mornings and getting calls from Davis.
“She had everyone’s cellphone number,” he said, and “she’d kind of yell into the phone, CHARLIE! It didn’t matter where you were; you were going to stop. She wasn’t going to let you go until she finished."