Question

Explain a recent example of stockholder activism.

Answer 1

The pressure brought by shareholders of a company on the management in taking certain decisions and implementing some rules is called stockholder activism. This is often seen in situations where shareholders threaten the management to quit or walkout showing their shares as their weapon to get things done their way . This includes normal discussions to huge rows. For example recently an airline company is forced to give the contract for it's spareparts to a well known company due to the pressure brought by some of it's shareholders. Due to this the aircrafts design was weak and hence many functional issues have arose and the company came under the scanner . It immediately cancelled the contract with that spare parts supplier and issued an apology to the public for the same. This is due to stockholder activism.