The argument here is that (1) most of Fox’s shareholders are diversified (other than Murdoch of course), (2) diversified shareholders, in some sense, own the entire world, and (3) if a company’s activities are bad for the world, they are bad for its (diversified) shareholders, even if they are lucrative for the company. This is a theory that we talk about a lot around here, and it is in some sense a new theory. A decade ago there were plenty of diversified shareholders and index funds, but it was not common to talk to shareholders as though they were owners of the whole world. You would say, in your shareholder proposals, ‘this is good for Fox’s long-term value’ or whatever. You wouldn’t say ‘this is bad for Fox, but good for the world, and as a Fox shareholder you own a lot of other companies too so you should care about the world, not just Fox.’
In modern markets, the paradigmatic shareholder is broadly diversified, and there is less reason to care about what any particular company does. What you want is for the huge diversified shareholders who have influence over every company to use that influence in a broadly desirable way. Companies are just data points; what you care about is aggregates. We talked the other day about a shareholder proposal at Fox Corp. that explicitly argued that the proposal might be bad for Fox’s bottom line, but will good for all the other companies that Fox shareholders also own. That is the way of the future.”
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What is new here is the explicit, coordinated appeal to common shareholders to use their voting power in one company for the benefit of their other companies. The main thing that I want to say is that this is interesting, and logical. Public companies are largely owned by large diversified institutional shareholders (though not so much Fox), and it does make sense for them to act in a way that is good for their overall financial interests rather than for each individual company to try to maximize its own price at the expense of the others. Why shouldn’t modern corporate governance work for the actual shareholders, rather than for an old-timey conception of what a company is.
Are you listening Vanguard? SEC? Time to move past “old-timey” and onto “the way of the future.”