Shareholder Activist Evelyn Y. Davis Addresses Millstein Center Forum

Renowned shareholder activist Evelyn Y. Davis addressed an audience of close to 80 attentive and appreciative persons at the Yale School of Management on April 29, as part of the Millstein Center for Corporate Governance and Performance’s Lunch Forum on Corporate Governance. Since the early 1960s, Davis has been a knowledgeable and outspoken advocate for individual shareholders, taking on the management and boards of major corporations in an attempt to make them more accountable. “She started the process of raising hell at annual meetings,” said Ira Millstein, the senior associate dean of corporate governance and Eugene F. Williams Jr. Visiting Professor in Competitive Enterprise and Strategy, in his introduction of Davis. “The meetings changed because of Evelyn. Now boards, CEOs, and management take the annual meetings seriously. She hits the sensitive targets at one meeting after another.”

For Davis, the annual meeting season — the short period each year when public corporations brief shareholders on performance and other issues — is always rejuvenating for her. This year, the subprime mortgage mess has made the season particularly interesting. “It’s the most exciting since 2003, when there were the analyst scandals,” she said. Davis is pushing a number of shareholder resolutions at a handful of the 90 corporations whose stock she owns. She wants companies to give executives actual stock rather than options as a way to make them more accountable to shareholders rather than to the strike price of their options. She wants corporations to remain politically neutral and for all political contributions by top executives to be published in newspapers (not on the Internet, a particular bugaboo of hers). And she wants to force boards to disclose the names of all former government employees on staff. “I’m not concerned about the high profiles ones — we all know who they are,” she said. “It’s the ones whose names we don’t know who get things done.”

As a shareholder activist, Davis can’t compete with the economic power wielded by Carl Icahn, who is able to buy significant stakes in companies. But she has honed a style that consistently gets the attention of executives (“I only speak to the CEO or the chairman, not flunkies,” she said.), and she takes great pride in the fact corporate boards are more responsive to shareholders now. For her, access is a key currency in her campaigns. She said she spoke to the CEO of Bank of America several times recently to complain about its acquisition of Countrywide Financial, the troubled mortgage lender. As she saw it, by adding Countrywide to its portfolio, Bank of America was cheapening its own brand. “They might as well buy Wal-Mart,” she said. “I said at the meeting that they were buying an iceberg — they only could see what was going on above the water, not what was happening below. I didn’t want the bank to sink like the Titanic.”

After the annual meeting, Bank of America sent out a press release announcing it would drop the Countrywide name after the buyout was completed. Davis took the development as a victory. “It shows how much power I have,” she said. “The headline is ‘Evelyn Gets Things Done.' I have power because I’m a loose cannon. They don’t know what I’m up to. It keeps them guessing.”