
Issue No 93		27 April 2001

LaborNET	Ask Neale	Tool of the Week

Review

Share-Holder Nation

by Ray Marcello

A legacy of government-backed privatisations, demutualisations and stockmarket hype over the past decade is the creation of a nation of shareholders.


	Rio Tinto Shareholder Activists

Despite the American tech stock crash, Australians remain dazzled by the allure of owning shares.

In early 2000 an Australian Stock Exchange survey found that when including personal share portfolios and managed investments like superannuation, 5.7 million Australians own shares.

And with their piece of the company, Australians must judge corporate performance from an owner's perspective and with an owner's obligations.

This is the premise behind Share Holder's Rights by Henry Bosch. The book is part of the growing literature about how to be a smarter shareholder through active ownership.

Bosch is a columnist with Fairfax's Shares Magazine and is widely held as the private share owners guru. He is a company director and was Chairman of the predecessor to corporate regulator, the Australian Securities and Investments Commission.

Bosch is also a member of the largest and most organised shareowners interest group in the country, the Australian Shareholders Association (ASA).

His book is a collection of Shares Magazine columns and is divided into issues like conduct at general meetings, the role of shareholders, corporations law reform, corporate crime, and dealing with corporate boards.

Using corporate timelines, much of the book's information, gathered over the past four years risks becoming old news although the entrée to corporate culture and lucid explanation of issues facing shareowners makes it a handy reference.

But probably the two most current (and fashionable) subjects in the book are corporate governance and the issue of corporate social responsibility.

Bosch has doggedly campaigned for a better deal for shareholders from the company directors behind the boardroom doors.

Indeed, ASA pressure was a factor behind the reform of the Coles Myer Board during the celebrated case involving its former chairman Solomon Lew whose private share deals led to his resignation.

For Bosch and many big professional investment institutions, good governance adds to the bottom line of creating shareholder wealth.

However, Bosch sides with conservative boards about the issue of corporate responsibility. He maintains that shareholder's financial interests prevail over the interests of stakeholders like countries, employees, and the natural environment.

Bosch opposes the growing numbers of shareholder activists who pressure their companies to consider the "triple bottom line" of social, environmental and financial reporting.

Yet despite the impressive growth of assets in ethical investment (around US $2 billion dollars are invested in US ethical funds), Bosch adopts a narrow view about how boards should spend shareholders money:

"The sole common interest of all shareholders is the ongoing prosperity of the company " and he also argues that "reason must rule passion".

He also credits the increase of the Lang Corporation's share price as a result of their illegal sackings of MUA members as an example of why companies should ignore protest and "political" demands. From the shareowners perspective, the higher share price and presumably better investment returns are the only consideration.

But this dour view is challenged by the emerging ethical business and corporate social responsibility agenda. For instance, the resource giant BP sponsors Shareholders Deliberate, a group that considers social and environmental responsibility.

Another example comes from Sydney lawyer, Robert C Hinkley who believes corporate conscience can be created by amending the corporations law to add human rights, the environment, employee dignity and community concerns to company director's fiduciary duty.

The issue of shareholders versus stakeholders is becoming fervent campaign ground for activists - from corporate campaigners who want to see more boardroom accountability, to NGO's who want to radically change corporate practices.

Australia has a poor record of shareholder initiated pressure. The one-time Workers Online Tool of the Week, Stephen Mayne is one example of shareholder activist who seeks to reform boards in order to boost company performance. His tactics at company AGM's lead the way for many stakeholder interests.

Several unions and internal company shareowner groups like North Ethical Shareholders Group (within North Ltd who own Rio Tinto) have used their ownership to fight for positive changes to the social impacts of company activities.

Market signals matter too. The Sydney Morning Herald reported a recent survey of 500 investors which found that 69% said given the opportunity, they would choose an ethical fund.

Clearly there is pressure to change corporate practices beyond the financial bottom line. The notion of the sustainable corporation and good social citizenship is a touchstone of the globalisation debate and are realities shareholders must now consider.

Share Holders Rights encourages the small shareholder to be proactive, but for investors who want their money to be well behaved, they should look to broader agendas.

Share Holder's Rights (Information Australia, 2000) by Henry Bosch

Ray Marcelo is an organiser with the NSW/ACT Independent Education Union

   Visit Ray at the IEU

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  Issue 93 contents

Corporate: The Jobs Myth
Access Economics' Chris Richardson debunks employer claims that increased workers compensation premiums have a dramatic impact on jobs.

Interview: The Workers’ Voice
When trade union stalwart Ian West took a seat in the NSW Upper House he was determined to be more than a bench-warmer. Then the Workers Comp legislation hit.

Unions: Postcard from the Pilbara
In the face of unprecedented pressure, BHP workers in the Pilbara are standing together and refusing to sign individual cotnracts.

Economics: Currency Unification: Dollarize or Die?
Dick Bryan asks what happens to an economy when it gives up its domestic currency.

History: Instant History
In his address to the Australian Labour History Conference, the SMH's Brad Norington asks whether there is still time for history.

International: The End of an Era?
The post-Cold War era is over. Something different is developing to take its place. John Passant writes.

Media: The Battle for Aunty
The CPSU's Graeme Thompson ouitlines the campaign to save the ABC and this week's emergency share-holders' meeting.

Review: Share-Holder Nation
A legacy of government-backed privatisations, demutualisations and stockmarket hype over the past decade is the creation of a nation of shareholders.

Satire: SOS: Save the Investment Banker!
Spare a thought for those less fortunate With redundancies at investment banks around the globe looming, now is the time for us to show the world just how much we care. It's just not right.

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» Queenslanders Call for End to Employer Theft

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» Commitment to Schizophrenia Research

» Activists Notebook: Workers of the World Unite

» ANZAC Special : Hundred Not Out