Exit vs. Voice: A Comparison of Divestment and Shareholder Engagement 72 New York University Annual Survey of American Law 2017-2018

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72 N.Y.U. Ann. Surv. Am. L. 113 (2017-2018)
Exit vs. Voice: A Comparison of Divestment and Shareholder Engagement

handle is hein.journals/annam72 and id is 125 raw text is:

EXIT VS. VOICE: A COMPARISON OF
DIVESTMENT AND SHAREHOLDER
ENGAGEMENT

ALEX GORMAN*

Introduction .... ....................................... 114
I. Background .................................. 116
A. The Rise of Anti-Corporate Activism ............ 116
B. Introducing Anti-Corporate Activist Tactics ...... 119
1. Audience: Activist Tactics Depend on the
Intended Audience ...................... 119
2. Scale ................................. 121
C. Audiences for Shareholder Campaigns .......... 122
D. Exit and Voice Framework . ................... 124
II. Divestment ................................... 125
A. Goals .................................... 126
B. Distinction from Socially Responsible Investing .. 128
C. Distinction from Disinvestment ................ 130
III. Engagem ent ......................................... 132
A . G oals ............................................ 133
B. Methods .................................. 133
1. Shareholder Voting Power .................. 133
2. Shareholder Resolutions ..................... 134
3. Shareholder Meetings .................... 137
4. General Engagement ..................... 139
C. Distinction from Shareholder Activism .......... 140
IV. Analysis.. ................................... 142
A. Costs of Pursuing the Tactic .................... 142
1. D ivestm ent .................................. 142
2. Engagement .. .......................... 147
3. Monitoring Costs ........................ 151
B. Direct Costs Imposed on Target Company ....... 152
1. Direct Costs Imposed by Divestment are
Attenuated ............................. 153

* Finance associate at Hogan Lovells in New York. J.D., New York University
School of Law, 2014; B.A., Stanford University, 2004. This Note is dedicated to the
memory of my mother, Jeanette Gorman, my strongest supporter and most
unforgiving editor. Special thanks to Professor Ryan Bubb for his invaluable input
at the early stages of this paper and to the staff of the NYU Annual Survey of
American Law for their excellent editorial contributions. Views expressed herein
are my own.

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