Voices in the Corporate Wilderness

This story is part of a special series by TheStreet.com investigating shareholders' reaction to corporate corruption on Wall Street. Click here to see a full listing of stories.

Les Greenberg, a semiretired securities lawyer in Culver City, Calif., became a shareholder activist over lunch -- or, more precisely, because of lunch.

Greenberg and his wife grew fond of a bargain entree called the LuAnn Platter while eating for 30 years at the Luby's(LUB - Cramer's Take - Stockpickr) cafeteria chain. Fond enough that when a new management team tried to revamp the chain and sent the stock into a tailspin, Greenberg, with the help of a Yahoo! message board, reached out to other disgruntled Luby's stockholders. With some of their support, he plunged into the rough-and-tumble world of shareholder activism, organizing a low-budget slate of dissident candidates to take on the board of directors at its January 2001 annual meeting.

Greenberg represents a small but growing group of individual shareholder activists who face a host of obstacles to effecting real change. They are underfunded and don't control much stock, and they generally rely on nonbinding resolutions to make their opinions known. Still, these rabble-rousers carry on, their voices rising in outrage as the list of corporate scandals lengthens. Even if they can't force change, the activists' growing profile has made other shareholders aware that there's an alternative to silent assent.

"We're seeing a sea change in investor attitude in governance and its importance," said Pat McGurn, vice president and director of corporate programs at Institutional Shareholder Services, which advises institutional shareholders on how to vote on proxies. "If nothing else, Enron and Global Crossing and the rest of them have been a consciousness-raising exercise for investors generally."

Overall, an unprecedented number of shareholder proposals received majority votes in the 2002 season, according to ISS. Some 479 proposals were presented to shareholders through June 14, a 7% increase from the same period last year. Of those, 106 won majority votes -- the highest number ever tracked by ISS. This year, the proposal submitted to the most companies called for submission of shareholders rights plans, or poison pills, to a shareholder vote, which was placed before 60 companies.