the Role of Shareholders in Modern Corporate Governance” Remarks at
Feb. 13, 2018
Thank you, Professor [Joe] Grundfest, for that kind introduction. It
is a pleasure to be with you this evening, and I would like to thank
the Corporations and Society Program and the Rock Center for Corporate
Governance for inviting me to visit with you. In particular, I would
like to thank Professors [Anat] Admati and [Joe] Grundfest for
extending to me such a warm welcome.
Before I go further, I must state that the views I express today are
my own, and do not necessarily reflect those of my fellow
Commissioners or the SEC staff.
Tonight, I want to talk to you about something that has been
vigorously debated in recent years: What is, and what should be, the
role of the corporate shareholder? In the spirit of being in
California, this debate could be summarized as follows: Are
shareholders merely extras in the corporate movie? Or are they lead
actors that need to be empowered so that they can successfully play
their roles? However, as most people in this room know, it is actually
much more complicated than that. It is not, and should not be
conceptualized as, a binary choice. Rather, I would posit that the
entire corporate ecosystem’s success actually rests on effective
communication and collaboration between corporations and their
shareholders. When a company, its management, its shareholders, and
its employees work together, companies tend to be more resilient and
prosperous. In turn, this benefits companies, their corporate
stakeholders, and the economy as a whole.
Today’s corporations influence and impact our society in a multitude
of ways. Corporations help grow our economy, provide well-paying jobs,
and provide earnings to investors saving for retirement, college, or a
new home. Many companies, whether small or large, are helping to drive
our society forward, developing new technologies that are raising our
living standards, improving our environment, and lengthening our life
span. Corporations hold some of our most precious assets, such as
medical histories, consumer bank account information, addresses, and
other sensitive information. They also are central players in some of
our most immediate problems, such as global warming.
Corporations have shaped, and will continue to shape, our society, our
identities, and our relationships with one other. This week’s series
seeks to promote a discussion of the interrelationship and
interdependency between corporations and our society. Pretty heady
stuff, to be sure, but extremely important. Not only from an academic
point of view, but from a practical and policy point of view, as well.
So, I thought I would start off our discussion tonight by talking a
bit about the science of “mutualism.” For those of you not familiar
with the concept, mutualism is a symbiotic relationship between
individuals of different species in which both benefit from the
association. One example of mutualism is the relationship between bees
and flowers. Bees fly from flower to flower gathering nectar to make
food. By flying from flower to flower, bees pollinate the plants on
which they land. Bees get to eat, and the flowering plants get to
reproduce. Bees help plants grow, thus supporting other animals,
including us humans. The bee-flower relationship is integral to our
entire food chain, and our larger ecosystem.
The relationship between a company and its shareholders is rooted in a
similar form of mutualism. Shareholders invest their savings or
capital in a company. The company then deploys the capital to fund its
operations. This allows the corporation and its shareholders’
investments to grow. This corporation-shareholder relationship is
likewise part of a larger ecosystem. When all goes well, more
employees and managers get hired, and the company produces more
products or provides more services, all of which benefits the entire
Unfortunately, the relationship between corporations and their
shareholders may be moving away from its origins and becoming less
mutualistic. This, I believe, may harm companies and their
shareholders, as well as those who depend on the health of the
So, how do we restore mutualism in the relationship upon which our
corporate ecosystem is based?
MUTUALISM AND THE CORPORATION-SHAREHOLDER RELATIONSHIP
I recently remarked upon the history of the American corporate form,
and I would like to start my talk tonight there, as well.
Don’t worry, I won’t go as far back as the Dutch East India Company
and its participanten, or the tulip bulb market.
Rather, I will quickly touch upon the history of the
corporation-shareholder relationship in the United States to inform
the rest of our discussion.
From the late-1700s to the mid-1800s, corporations started to flourish
in the United States.
American companies typically operated within a single state or
The shareholders of a corporation were often members of the same
community in which the corporation was located. As a result, they were
able to engage and monitor the company’s business affairs in a more
direct manner than we currently see today. A corporation also met with
its shareholders more frequently, whether in the form of shareholders’
meeting or otherwise.
Beginning in the mid-1800s, however, companies started growing larger
and the corporate form changed.
Companies began hiring managers—who often had no ownership interest in
the companies—to run their affairs. While this transition created
it also in many cases separated the ownership of the company from the
management of the company. This had the effect of reducing
shareholders’ ability to directly influence the company’s business.
Mutualism and the Corporation-Shareholder Relationship in Recent Years
A lot has happened since the mid-1800s, and we are now at a tipping
point. Instead of being in the midst of an industrial revolution, we
are in the midst of a digital revolution. This new revolution comes
with many benefits—speed, efficiency, and innovation, to name only a
few. Coupled with these benefits, however, are also some risks. I
think if we focus on the strengths of the American corporate form, we
can successfully reimagine the corporation-shareholder relationship
for the Digital Age.
I would like to discuss a few examples of how, in modern corporate
governance, the concept of mutualism can help us think through the
path forward for corporations, their shareholders, and the larger
As we all know, the digital transformation is providing both companies
and shareholders with tremendous opportunities. However, one of the
biggest challenges facing corporations and their shareholders, their
employees and consumers, and our economy as a whole, is cybersecurity.
As we have learned, cyberattacks can affect millions of people at once
and potentially compromise our most sensitive personal information.
Shareholders have been out front advocating for more information on
company practices relating to cybersecurity.
The number of shareholder proposals regarding cybersecurity has
increased in recent years.
But good information remains scarce. Unfortunately, corporate
disclosures are far from robust and largely consist of boilerplate
language that fails to provide meaningful information for investors.
While companies and shareholders agree that cybersecurity is one of
the most prominent corporate issues of our time, it is unclear why
companies are not doing more to implement robust cybersecurity
frameworks and to provide meaningful disclosures regarding the risks
of data loss.
Companies and their intermediaries tend to view cyberthreats as a
technology problem instead of, more appropriately, a business risk. As
we have seen time and time again, cybersecurity, and the related
threats of unintentional loss of data, is a governance challenge for
all of us, and it requires a change in culture and approach. Many
shareholders seem to understand this and have been urging, and
continue to urge, companies to engage.
Regulators are certainly not immune from facing these challenges. In
August 2017, I learned for the first time that the Commission’s
official record system was breached in 2016, and that this breach may
have provided the basis for illicit gains through trading.
Clearly, the Commission’s enterprise risk management processes failed
to adequately address appropriate escalation protocols. Once he was
informed, Chairman Clayton immediately launched an investigation into
the breach and has focused the Commission and the staff on improving
our risk management framework.
Companies, their managers, their boards, as well as their regulators,
all need to do a better job in recognizing and addressing the
significant risks that can result from the loss of data. Breaches of
security measures can result in theft, reputational harm, or the loss
of intellectual property. Simply put, the unintentional loss of data
may have material effects on companies. Slowly, regulators around the
globe are stepping up to the challenge of issuing data protection laws
and regulations. The approach to these issues continues to evolve with
the changing landscape. For example, the European Union’s General Data
Protection Regulation is set to go into effect in May 2018.
China has begun enforcing regulations concerning “critical information
Last March, the New York Department of Financial Services required
that regulated firms name a chief information security officer (or
CISO). These CISOs must provide an annual report on cybersecurity to
the firm’s board.
Last year, a bipartisan bill was introduced in the Senate to require
publicly traded companies to disclose whether any members of their
board have cybersecurity expertise.
We at the Commission have not yet adequately pressed forward. While
the Commission’s staff has released disclosure guidance for public
companies to consider when dealing with cyberrisks and breaches,
the Commission can and should do more. I believe the Commission should
consider rules to require disclosure of a firm’s enterprise-wide
consideration of cyberrisks. I also believe that we should develop
rules to ensure that market intermediaries, including broker-dealers
and investment advisers, develop and implement policies and procedures
to protect investors’ personal information.
The security and integrity of a corporation’s assets, like the SEC’s,
is a great responsibility. As I said earlier, cybersecurity has been
viewed by many as simply an “IT” problem, hoisted on the shoulders of
a company’s chief information officer. Too often, this has led to a
failure to integrate cybersecurity into a firm’s enterprise risk
management framework. To be sure, some companies are focused on
cyberthreats and recognize their potential economic threat. But
companies need to do more than simply recognize the problem. They need
to heed the calls of their shareholders and treat cyberthreats as a
business risk. Corporations and shareholders will both benefit from
greater transparency and focus on the risks related to unintended data
loss and the collateral consequences.
The composition of corporate boards provides another example of how
the concept of mutualism is informative. Boards can and should be a
bridge to investors, but too often they are a wall. Board composition
is vitally important as directors play a meaningful role in helping
companies make productive investments and good decisions going
forward. However, boards remain far from diverse or reflective of
shareholders’ views despite evidence pointing to the value of such
diversity in their composition.
Gender diversity on boards provides a notable example. This is not
about making people feel good—it is about dollars and cents. Studies
suggest that women may be better monitors of executives, a central
function of boards of directors.
Research has also shown that companies with strong female leadership
generated higher returns on equity compared to those without.
This may be because having a diverse board helps the company better
understand purchasing and usage decisions by its clients or customers.
Studies have found, after all, that women drive 70% to 80% of
purchasing in the United States.
As I have remarked in the past, diverse boards also appear to deter
“groupthink” and help reduce instances of fraud, forms of corruption,
and shareholder contests.
The Commission and regulators across the globe have also echoed the
importance of gender diversity on boards.
Despite all of this, gender diversity on boards remains elusive.
The percentage of women on boards is currently at approximately 20%,
an increase of only 5% since 2011.
This is striking when you consider that women make up 50.5% of the
and approximately 47% of the U.S. labor force.
Indeed, the United States lags behind many advanced economies in terms
of women’s representation on corporate boards.
More striking still, it is not just academics and think tanks that
support gender diversity on boards. Shareholders, too, expect the
companies they own to have diverse board membership. For example,
State Street Global Advisors
have adopted policies or guidance with respect to increasing gender
diversity on boards, and indicated their willingness to use their
voting power to effect change, if necessary.
Yet, despite the documented benefit of diverse boards, many board
members do not believe that board diversity enhances company
Further, more than half of directors believe that their boards are
already sufficiently diverse.
It is one thing for boards to ignore scholarly research, but it is
quite another for boards to ignore their companies’ shareholders or
owners. Especially when it can affect everyone’s bottom line. Although
we have come a long way since the 18th
Century, we still have a long way to go. How can technology help this
process? Can it be used to better connect a company and its board with
its shareholders? How can a corporation capitalize on mutualism and
benefit from the best ideas of its shareholders for the benefit of
Changes in the corporation-shareholder relationship are perhaps most
apparent when looking at efforts to curtail shareholders’ information
and rights. As owners of a company, shareholders actually care about
corporate practices of all types and how they affect the bottom
line—from strategic plans to employee relations to executive
compensation, and much more. So-called shareholder activism can
provide a necessary check on a company’s leaders.
Or it can be a needless expense for a company ultimately producing no
benefit. Whatever your opinion, shareholder activism seems to be here
to stay, with 39% of directors believing that there will be an
increase in shareholder activism in 2018.
In recent years, shareholder activism has prompted myriad responses
from corporate boards and management.
Many simply try to fend off shareholders. Many engage with
shareholders, but because about 70% of the share ownership of U.S.
companies is from huge investors,
that is where they focus.
Thus, the entire battle is fought for the opinions of a handful of
executives at large asset managers.
Though the decision to engage institutional shareholders may simply be
a matter of numbers, what are the long-term effects
on the company
of this sort of narrow shareholder engagement?
Does engaging the view of only one group of shareholders result in a
form of short-termism? Could it result in a company putting on
blinders that can affect its long-term bottom line? Ultimately, how
does this sort of one-sided engagement affect the company’s position
in the larger ecosystem?
In effect, is shareholder activism a symptom of an underlying problem
or part of the cure? I believe that we need to get back to a more
mutualistic relationship in order to properly answer that question.
Dual-Class Capital Structures
Another place where the concept of mutualism needs to be considered is
in regard to dual-class capital structures, where certain shareholders
are starting to be disenfranchised by design.
As you know, in typical dual-class capital structures, corporate
insiders receive common stock with multiple votes per share while
public shareholders receive shares with one vote per share.
This structure allows these corporate insiders to control a majority
of the votes of the corporation even though they own a minority of its
While dual-class capital structures have existed for many years,
much has been written about them recently. This may be in part because
of an upsurge in dual-class IPOs—from Google in 2004 to Manchester
United in 2012. And we all have heard about Snap and its IPO of
shares in 2017.
Many, including myself, see dual-class capital structures as
inherently undemocratic, disconnecting the interests of a company’s
controlling shareholders from its other shareholders.
The disassociation of interests can grow over time when certain
shareholders, but not others, have the right to vote over fundamental
corporate matters—like board members.
It is not surprising, then, that critics include shareholder groups,
asset managers, and stock indices.
Or that they are prohibited by some countries.
Yet, we are still inexplicably letting dual-class share structures
Why does the appetite for dual-class capital structures exist despite
wide investor disapproval of such structures? Where is the symbiosis?
Can investors afford not to invest in another Google, even if they do
not agree with the share structure? What leverage do they have? What
happens when the interests of a company’s controlling shareholders
continue to diverge from its other shareholders? Is there a risk that
a company’s controlling shareholders will acquire conflicts of
interest so large that the company cannot act in the best interests of
all of its shareholders?
While some say dual-class capital structures are designed to prevent a
takeover or shareholder activism, they also may provide a means to
evade management and board accountability. Structures where a minority
of insiders lock out the interests and rights of the majority may also
have collateral effects on our capital markets. They may be harmful
not just for those companies, their shareholders, and their employees,
but for the economy as a whole. Dual-class capital structures, in
effect, turn the mutualism underlying the corporation-shareholder
relationship on its head.
A WAY FORWARD
While it is clear that the relationship between a company and its
shareholders is currently in flux, it is less clear how we should move
forward. How can we restore the mutualism that serves as the
foundation for the corporation-shareholder relationship, and that has
benefited companies, their shareholders, and the economy as whole
since the 1700s?
Shareholder empowerment is key. As I have discussed tonight, the
benefits of shareholder involvement are not abstract. Shareholders
often fight for corporate values—such as diverse boards—that
empirically have positive, direct effects on the corporate bottom
line. They often do this well before managers or boards are willing to
consider or implement such changes. Despite this, corporations appear
to be searching for ways to ignore shareholders, even on a structural
Shareholder engagement is, I believe, a good first step in enhancing
the corporation-shareholder relationship for the benefit of both.
Despite the trends toward a less mutualistic relationship, there are
some positive signs. For example, companies and their shareholders are
increasingly sitting down at the same table these days.
Companies are also hiring advisors to help them engage directly and
consistently with their shareholders.
This has allowed companies to have a continuing dialogue with their
Many companies are also utilizing technology to better facilitate
engagement with their shareholders. From hosting virtual or live
webcasts of their shareholder meetings, to using social media and
mobile technology, companies are searching for new and better ways to
actively engage their shareholders.
Unfortunately, this shareholder engagement has largely been geared
toward those with the most voting power. Companies can also benefit
from the engagement of retail investors. And, as I have said before,
technology can also serve this purpose. After all, more Americans are
technology-literate than ever before.
Indeed, approximately 80% of Americans had a social media profile in
2016. Perhaps, shareholders should be allowed to vote through social
media or a mobile phone application, like in Estonia.
New and cutting-edge technologies may help in other ways. Companies
might be able to use distributed ledger or blockchain technology to
identify and reach their shareholder bases more effectively.
Currently, companies mainly communicate with shareholders through
broker or bank intermediaries, because the shares are held in the
names of these intermediaries rather than in the names of the
beneficial owners. This means that, in some cases, companies do not
actually know who their shareholders are. While this complex construct
may have been necessary in the 1970s, current technology could enable
companies to directly communicate with shareholders without the need
The Commission can do more, too. While we have issued rules that shape
the means by which a company communicates with its shareholders,
we should continue to be ready to help fortify the
corporation-shareholder relationship as we move forward. For example,
we should adopt final rules regarding the use of universal proxy
These rules should recognize that few shareholders can dedicate the
time and resources necessary to attend a company’s meeting in person
and that, in the modern marketplace, most voting is done by proxy. The
Commission’s rules need to change to reflect our current reality,
empowering companies and shareholders alike.
In a time when ownership is global and disparate, the use of
technology and the Commission’s rules are simply tools to further the
empowerment of a corporation’s owners. We have seen throughout history
that a company’s growth and its owners’ prosperity are often enhanced
by direct engagement. In other words, both engaging with one another
for the good of all, or mutualism. The result is a corporation that is
more nimble and grows in an ecosystem that thrives on transparency.
This was true in the 1700s and it is still true today.
* * * * *
As we move forward, we have to ask ourselves how we can strengthen the
corporation-shareholder relationship. For it has been foundational to
the success of the American corporate form.
As I have discussed tonight, the corporation-shareholder relationship
must be reimagined in the context of modern corporate governance to
recapture its benefits. Shareholders, like management, share the
desire to grow a company’s bottom line. But they can only help if they
We need to go back to first principles: A corporation’s growth and its
shareholders’ prosperity are intertwined. To succeed, they must work
Thank you for your time, and for inviting me to speak with you this
See Commissioner Kara M. Stein, Closing Remarks at the SEC-NYU
Dialogue on Securities Market Regulation (Jan. 19, 2018),
See J. Matthijs de Jongh,
Shareholder Activism at the Dutch
East India Company 1622 – 1625, Paper presented at the Conference
on the Origins & History of Shareholder Advocacy, Yale School of
Management, Millstein Center for Corporate Governance and Performance,
November 6–7, 2009, available at
. See also 1602 Trade with the East: VOC,
See Ralph Gomory & Richard Sylla,
The American Corporation,
142 Dædalus 102 (2013) (“American Corporation”),
See American Corporation.
See American Corporation; Adolf A. Berle & Gardiner C. Means,
The Modern Corporation and Private Property (Routledge 2d Ed. (Feb.
1991)) (“Modern Corporation”).
See American Corporation; Modern Corporation.
See Modern Corporation.
See also James P. Walsh & James
K. Seward, On the Efficiency of Internal and External Corporate
Control Mechanisms, 15 Academy of Mgmt. Rev. 421 (1990),
See American Corporation.
See, e.g., Priya Anand, “NYSE releases a cybersecurity guide
for public companies,” MarketWatch (Oct. 14, 2015),
See, e.g., Tara Bernard
et al., “Equifax Says Cyber
Attack May Have Affected 143 Million in the U.S.,”
The New York
Times (Sept. 7, 2017), available at
; Kevin McCoy, “Target to pay $18.5M for 2013 data breach
that affected 41 million consumers,” USA Today (May 23, 2017),
See, e.g., Allison Grande, “Apple Shareholders Join Push For
Cybersecurity Disclosures,” Law360 (Sept. 25, 2012),
See, e.g., Laura D. Richman & Michael L. Hermsen, “2016 Proxy
Season Update,” Harvard Law School Forum on Corporate Governance
and Financial Regulation (Oct. 13, 2015),
See, e.g., U.S. Securities and Exchange Commission
Cybersecurity Roundtable, Transcript (Mar. 26, 2014),
See Chairman Jay Clayton, Statement on Cybersecurity (Sept. 20,
2017), available at
See European General Data Protection Regulation (GDPR),
See, e.g., Sarah Zhao, Sally Qin & Stephanie Sun, “An Update On
China's Cybersecurity Law, 3 Months In,” Law360 (Sept. 8,
2017), available at
See, e.g., Liz Skinner, “New cybersecurity regulation hits New
York financial firms March 1,” InvestmentNews (Jan. 17, 2017),
See Cybersecurity Disclosure Act of 2017, S. 536, 115th
Cong., available at
See CF Disclosure Guidance: Topic No. 2, Cybersecurity,
Division of Corporation Finance (Oct. 13, 2011),
See Renee Adams & Daniel Ferreirra,
Women in the Boardroom
and their Impact on Governance and Performance, 94 J. of Fin.
Econ. 291 (2009), available at
See Linda-Eling Lee
et al., Women on Boards: Global
Trends in Gender Diversity on Corporate Boards, MSCI ESG Research
Inc. (Nov. 2015) (“MSCI Women on Boards”), available at
See Erica Hersh, “Why Diversity Matters: Women on Boards of
Directors,” Harvard T.H. Chan School of Public Health Executive and
Continuing Professional Education, available at
See, e.g., Commissioner Kara M. Stein, “Toward Healthy
Companies and a Stronger Economy,” Remarks to the U.S. Treasury
Department’s Corporate Women in Finance Symposium (Apr. 30, 2015),
See, e.g., Item 407(c) of Regulation S-K [17 CFR 229.407(c)];
Claire Zillman, “The EU Is Taking a Drastic Step to Put More Women on
Corporate Boards,” Fortune (Nov. 30, 2017),
See, e.g., Julie Daum, Laurel McCarthy & Ann Yerger, “Board
Composition: A Slow Evolution,” Harvard Law School Forum on Corporate
Governance and Financial Regulation (Dec. 26, 2017),
See Report by 2020 Women on Boards Gender Diversity Index:
2011–2017 Progress of Women Corporate Directors by Company Size, State
and Sector, available at
See “Population, female (% of total),” The World Bank,
See Mark DeWolff, “12 Stats About Working Women,” U.S.
Department of Labor Blog, available at
See Claire Cain Miller, “Women on Boards: Where the U.S.
Ranks,” The New York Times (Mar.10, 2015),
See SSGA’s Guidance on Enhancing GenderDiversity on Boards
(Mar. 7, 2017), available at
See Investment Stewardship Report: Americas Q2 2017 (Jun. 30,
2017), available at
; Emily Chasan, “BlackRock Puts Its Votes Behind Proposals
to Get Women on Boards,” Bloomberg (Jul. 13, 2017),
See “The governance divide: Boards and investors in a shifting
world,” PwC’s 2017 Annual Corporate Directors Survey (2017),
PricewaterhouseCoopers LLP (“PwC 2017 Annual Survey”),
PwC 2017 Annual Survey.
See David Benoit & Vipal Monga, “Are Activist Investors Helping
or Undermining American Companies?,” The Wall Street Journal
(Oct. 5, 2015), available at
; Huw Van Steenis, “In praise of activist investors,”
Financial Times (Jun. 26, 2017),
See PwC 2017 Annual Survey.
See, e.g., David A. Katz & Laura A. McIntosh, “Corporate
Governance Update: Preparing for and Responding to Shareholder
Activism in 2017,” Harvard Law School Forum on Corporate Governance
and Financial Regulation (Mar. 24, 2017), available at
; “Activist shareholders: How will you respond?,” Deloitte
(2015), available at
See “ProxyPulse: 2017 Proxy Season Review,” Broadridge Investor
Communication Solutions, Inc. & PricewaterhouseCoopers LLP (2017),
See David Benoit & Kirsten Grind, “Activist Investors’ Secret
Ally: Big Mutual Funds,” The Wall Street Journal (Aug. 9,
2015), available at
; John Kell, “Here’s why activist investors are winning so
many fights,” Fortune (Aug.10, 2015),
See, e.g., Tim Loh & Jack Kaskey, “DuPont Retail Investors
Prove Decisive in Defeat of Trian,” Bloomberg (May 13, 2015),
See John C. Bogle, “The Modern Corporation and the Public
Interest,” Speech Before the Public Company Accounting Oversight Board
(Dec. 7, 2017), available at
See Joel Seligman,
Equal Protection in Shareholder Voting
Rights: The One Common Share, One Vote Controversy, 54 Geo. Wash.
L. Rev. 687 (1985), available at
For example, Facebook’s founder, Mark Zuckerberg, owns less than 1% of
Facebook’s equity capital, but controls approximately 60% of its
voting power. See Benjamin Robertson & Andrea Tan, “Dual-Class
Shares,” Bloomberg (Dec. 15, 2017),
Facebook, Inc., Proxy Statement on Schedule 14A dated April 14, 2017,
For example, Viacom Inc. adopted a dual-class capital structure in
1990, where its controlling shareholder, Sumner Redstone, controls the
company while holding 8% of its equity capital.
See Lucian A
Bebchuk & Kobi Kastiel, The Untenable Case for Perpetual Dual-Class
Stock, 103 Va. L. Rev. 585 (2017) (“Bebchuk & Kastiel”),
See Snap Inc., Prospectus dated March 1, 2017,
See Bebchuk & Kastiel; “Discussion Draft Re: Dual Class and
Other Entrenching Governance Structures in Public Companies,” Investor
as Owner Subcommittee, SEC Investor Advisory Committee (Dec. 2017),
See, e.g., Facebook, Inc., Annual Report on Form 10-K for the
fiscal year ended December 31, 2016, available at
(stating “Mark Zuckerberg, our founder, Chairman, and CEO, is able to
exercise voting rights with respect to a majority of the voting power
of our outstanding capital stock and therefore has the ability to
control the outcome of matters submitted to our stockholders for
approval, including the election of directors and any merger,
consolidation, or sale of all or substantially all of our assets. . .
. In addition, Mr. Zuckerberg has the ability to control the
management and major strategic investments of our company as a result
of his position as our CEO and his ability to control the election or
replacement of our directors.”).
See, e.g., “Dual-Class Stock,” Council of Institutional
Investors, available at
http://www.cii.org/dualclass_stock ; Madison Marriage,
“State Street asks SEC to block non-voting shares,”
(Jun. 18, 2017), available at
; Chris Dieterich, Maureen Farrell & Sarah Krouse, “Stock Indexes
Push Back Against Dual-Class Listings,” The Wall Street Journal
(Aug. 2, 2017), available at
See, e.g., Aurelio Gurrea Martínez, “Should securities
regulators allow companies going public with dual class shares?,”
Oxford Business Law Blog (Jan. 16, 2018),
See Georgina Lee, “Will the introduction of dual-class shares
in Hong Kong boost Chinese tech shares listed in US?,”
Morning Post (Feb. 4, 2018), available at
(discussing Hong Kong Exchanges & Clearing Ltd.’s decision
to permit dual-class capital structures for companies listed on its
See, e.g., Matt Orsagh, “Shareholder Engagement: Bridging the
Divide Between Boards and Investors,” CFA Institute Market Integrity
Insights Blog (Mar. 26, 2014), available at
See, e.g., Steven Davidoff Solomon, “A New Strategy for
Shareholder Activism: Engagement,” The New York Times (Nov. 29,
2016), available at
See, e.g., Sherri McLoughlin, “Using Technology for Better
Shareholder Engagement,” Corporate Secretary (Nov. 10, 2017),
. While I am in favor of new applications of technology, we
must also be cognizant of how it affects those that are unable to use
the new technology.
See, e.g., Shannon Greenwood, Andrew Perrin & Maeve Duggan,
“Social Media Update 2016,” Pew Research Center (Nov. 11, 2016),
See, e.g., Kalev Leetaru, “How Estonia's E-Voting System Could
Be The Future,” Forbes (Jun. 7, 2017), available at
(discussing Estonia’s e-voting system, which has allowed
online voting for national elections for more than a decade).
See, e.g., Jeff John Roberts, “Companies Can Put Shareholders
on a Blockchain Starting Today,” Fortune (Aug. 1, 2017),
See, e.g., Regulation 14A [17 CFR 240.14a-1 – 17 CFR
See Commissioner Kara M. Stein, Statement on the Proposed Rule
to Require the Use of Universal Proxies (Oct. 26, 2016),