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New generation of gadflies taking on corporate governance

New generation of gadflies taking on corporate governance

by Toby Lucich on January 8, 2007

Remember when investors who pestered companies about their governance practices were deemed nothing more than trouble-making gadflies? Now their tactics are looking increasingly smart.

Just consider how intense shareholder pressure over Home Depot Inc.’s CEO pay finally contributed to Robert Nardelli’s surprise resignation last week. And Morgan Stanley seems to see power in using governance to its advantage, too, as evidenced by its recent hire of a well-regarded expert in investor activism to work in its investment division.

The message is simple: As much as cash flows and earnings matter in investment decisions, getting ahead in today’s markets also entails closely watching how corporate boards enrich top executives and the power they allow such leaders to have over business dealings.

New generation of gadflies taking on corporate governance

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