Citibank Shareholders Give Thumbs Down to CEO Raise

I have a vague idea about what you were trying to say. But that is the way life is. You can wage an expensive campaign against an incumbent politician who can outraise his opponent 3 to 1. And your chances of ousting him won't be that great. And that discourages people from waging those kinds of wars. Then is the breaks. You don't always get your way.

What you ARE missing, though, is that shareholder activists very often achieve their goals without all out proxy wars. They negotiate behind the scenes. And they can do that with great incentive -- gaining nearly all of the benefit.

This from something the Wall Street Journal did this week, demonstrating what I am talking about. A company like Citigroup can have 10 or more proposals on their proxies in any given year.

Goldman Sachs, had no more than one proposal between 2000 (when it went public) and 2006, and only three in 2007 and four at the height of the financial crisis in 2009. This year it fought to have a half dozen proposals -- all of them highly embarrassing to the board and management -- removed via SEC ruling.

Goldman negotiated with the Association of Federal, State and City Municipal Employees to get the union to withdraw a proposal to split the role of chairman and chief executive at Goldman, which could have cost Lloyd Blankfein his seat as chairman. The company appointed James Schiro its lead director, a compromise that Afscame wanted. Without a full-out proxy war, and without bearing great expense or any free rider problem, the union used its clout to achieve changes it wanted.

Goldman also negotiated with the New York City Comptroller and got him to writhdraw a proposal that dealt with pay clawbacks. Again, no full-out proxy war, and no great expense necessary. Just the threat of a proposal that would subject the company to negative publicity and some horse trading to make the dissatisfied shareholder happier.