A Kindred View on "Shareholder Democracy"

As I wrote in this post recently, all I really want "shareholder democracy" to mean is that I can buy or sell equity shares, cheaply, into a liquid market, whenever I wish.

Now, according to Wednesday's op-ed piece by Holman Jenkins in the Wall Street Journal, I am not alone. While beginning with the Conrad Black case, Jenkins moves to the general topic of shareholder democracy and corporate governance about 3/4 of the way through his piece.

He wrote,

"Alas, corporate governance has become a new favorite cause of society's forces of self-righteousness. They flog the unanalytical ideal of "shareholder democracy." Democracy is a four-syllable word for "good" in these mouths, but does it really apply in this case of companies whose shares trade on a stock exchange?

Investors, after all, have thousands of companies to choose from, with ease of entry and exit afforded through the stock market....You are equally free to buy buy shares in a company in which control remains with a dominant shareholder whose interests may not be synonymous with your own."

Thus, Jenkins agrees with me on the key point that what is essential is the easy entry to, and exit from, equity positions. Voting on various proxy issues is, he agrees, tangential, because you can, in fact, select from numerous equities in which to invest. Jenkins goes further than I did, pointing out that there are markets for each type of company/corporate governance model.

It's a valid and good, nuanced point. As I have written elsewhere in a prior post, if one is Eddie Lampert, voting is moot. You just tender for the company's shares and own the problem. Short of that, I'm not sure what shareholder voting gets you, but, as Jenkins notes, to each his own. You can find almost any model/structure you wish among various listed equities.

As in the case of Warren Buffett echoing my thoughts on the attractiveness, or lack thereof, of certain sectors, it's also nice to be joined by someone like published columnist Holman Jenkins of the Wall Street Journal in seeing the "shareholder democracy" fad for what it is, and focusing instead on the basics- the freedom to buy and sell shares easily and inexpensively.