The Populist Quest for
Shareholder Democracy
From 1940 to 1979, as individuals steadily
came to own more and more corporate
equity, the annual meeting grew increas-
ingly engaging. While only a small per-
centage of shareholders attended, and a
minority of those spoke up, they helped
forge a shareholder-centric orientation
across corporate America.
The Gilbert brothers and fellow advo-
cates put proposals on the meeting agenda
for a vote, posed pointed questions to
senior managers during the proceedings
and then publicized their progress widely.
All were media savvy, spreading their mis-
sion in articles and books, on radio and
television, and through public lectures
and Congressional testimony.
The Gilberts were known as the deans
of the professional shareholders. Through-
out this period, the brothers personally
attended as many as 300 annual meet-
ings yearly and covered another 50 with
a small staff of associates. Legatees of an
estate whose assets included small stakes
in some 600 public companies, the two
lived in a fashionable apartment building
on Manhattan’s Upper East Side.
The Gilberts’ persistence and logic won
them many governance reforms over five
decades, ranging from confidentiality in
shareholder voting to the rise of outside
directors. As early as 1947, they gained
a tactical advantage after pushing share-
holder proposals at Transamerica to have
shareholders choose the auditors and for
a post-meeting transcript. In ordering the
company to comply, an influential court
opinion famously explained, “A corpora-
tion is run for the benefit of its stockhold-
ers, not for that of its managers.”
Annually from 1940 to 1979, the Gil-
berts published a book-length account of
the major annual meetings and related
issues of the day. Entitled “Annual Reports
on Stockholder Activities at Corporation
Meetings,” the Gilbert volumes were pub-
lished in limited quantities—print runs of
8,500 in earlier years and 6,000 in later
ones—and are today collectors’ items. 1
The reports were astonishingly consistent,
opening with 20 pages of photographs from
the year’s meetings; a brief useful glossary; a
consciously-compact average of about 265
pages of narrative text; an index of compa-
nies; and, most impressively, a substantially
identical table of contents (see Figure 1).
Figure 1: The standard table of contents
appearing in the Gilbert brothers’ annual
report on shareholder meetings.
The books and meeting attendance had
one overriding purpose: to promote “peo-
ple’s capitalism.” By 1954, they had already
made substantial progress. As put by a dis-
tinguished contemporary establishment
figure, Covington Hardee, who served as
general counsel of Union Pacific Railroad
and later CEO of Lincoln Savings Bank,
the Gilberts were waging a “remarkable
campaign” for “shareholder democracy.”
Hardee credits the Gilberts with making
the annual meeting a meaningful forum to
present shareholder opinion and influence
managerial action. They made it a priority
to have meetings held in rational loca-
tions—locales with a high concentration
of shareholders, major urban settings with
good local transportation, near company
facilities and, for some companies, rotat-
ing across a series of cities. They advocated
for adequate seating, including overflow
rooms, and closed-circuit TVs, and for
meeting transcripts to be circulated after-
wards, including identification of those
posing questions from the floor to facili-
tate shareholder coordination.
The Gilberts argued for cumulative vot-
ing, preemptive rights and annual finan-
cial audits, and against staggered boards.
They scrutinized executive pay and urged
periodic shareholder approval of incen-
tive bonus plans. They were vociferous
critics of stock options for managers and
opposed employee stock ownership plans
(ESOPs) overseen by managerial trust-
ees. Hardee rightly described the Gilbert
reports as “absorbing reading” and, while
containing “a certain brashness of tone,
such a gadfly for management is useful.”
Discussion explores dozens of specific
meetings to animate the prevailing atti-
tude of managers and shareholders. Strik-
ing is how similar debates rage today,
including: the pros and cons of staggered
boards (continuity versus accountabil-
ity); age limits for directors (the Gilberts
favored mandatory retirement at age 72);
separating or combining the chairman
and CEO roles (the Gilberts urged sepa-
rating); “over-boarding” (directors not
sitting on too many boards); and proxy
voting (from shareholder nominations of
directors to the possibility of shareholders
voting no for specific directors).
The Gilberts—and fellow gadflies—
rated companies on many aspects of
shareholder democracy. As to the con-
duct of meetings, they graded chairmen
on the degree of conformity to Robert’s
Rules of Order, the bible of parliamentary
procedures, though it is not required by
law. Among the era’s leading experts on
Robert’s Rules was the Gilberts’ friend
and fellow activist Wilma Soss, who in
1947 founded the Federation of Women
Shareholders of American Business and
for many decades hosted a popular NBC
radio show called “Pocketbook News.”
At shareholder meetings, when chair-
men would silence Soss for being “out of
order,” she would cite specific passages
from Robert’s Rules to explain that it
was not she who was out of order. If the
Gilberts veered urbane and diplomatic,
Soss had a reputation for antics and impu-
dence. Soss made her point about share-
holder voice a dramatic one, by bringing
megaphones to meetings, and a literal
one, by demanding that microphones be
placed throughout meeting halls.
A 1951 profile of Soss in The New Yorker
criticized her incendiary behavior, but for
a woman of that era and in that context,
her tactics were far more effective than
would have been following the Gilbert
www.MoAF.org | Fall 2018 | FINANCIAL HISTORY 15