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Revolution in the Boardroom

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Richard Levick and Kathleen Wailes

NEW YORK (TheStreet) - Activist investor Daniel S. Loeb just claimed another corporate scalp. Tuesday's announcement that Yahoo Chairman Roy J. Bostock and the company's three longest-serving directors will not seek reelection represents Loeb's second major victory in as many months. In January, Yahoo CEO and co-founder Jerry Yang stepped down amid rampant speculation that Loeb was plotting a proxy fight aimed at forcing a management shakeup. Yang's ouster and the subsequent board overhaul were no small feats, even at an underperforming company such as Yahoo. Notch another win for the activists. More are sure to follow.

In fact, it was just days after Yang's resignation that Research in Motion co-CEOs and founders Jim Balsillie and Mike Lazaridis stepped down amid a similar chorus of shareholder dissent. That announcement was accompanied by news that Canadian activist Prem Watsa (whose Fairfax Financial Holdings now owns about 5.12% of the company) would be joining the RIM board. Activist in; co-founders out. In less than a week, we had been provided two powerful signals that there are no longer any sacred cows where battles for corporate control are concerned.

And it isn't just those investors who control millions of shares that boards and C-Suites need to be worried about. Dodd-Frank's new proxy access rules are now on the books and poised to open the director-nominating process to small shareholders that meet certain minimum criteria. Already, investors in 16 major companies -- including Hewlett-Packard, Goldman Sachs, Wells Fargo and others - are attempting to amend corporate bylaws to enable the unprecedented levels of access now permissible under the SEC rule.

One such investor is Kenneth Steiner. A small shareholder who has offered up hundreds of governance reforms over the years, Steiner recently proposed that the boards of companies including Bank of America, Sprint Nextel and others, "amend their companies' bylaws to permit any group of 100 or more shareholders who have held at least $2,000 in stock for at least one year -- or any holder of 1% or more for at least two years -- to nominate directors." In today's activist environment, Steiner's story isn't unique because of what he did; it stands out because of how he did it.

Steiner's use of a form he downloaded from the activist investor site proxyexchange.org to submit his proposals is a clear demonstration of the role social and digital media are playing in increased shareholder empowerment. On sites such as proxyexchange.org, proxydemocracy.org, and MoxyVote, small shareholders are pooling their sentiments and their shares to drive reforms at the companies they own -- and their focus extends far beyond financial performance. On MoxyVote, shareholders can foment support for "good cause" proposals on issues ranging from environmental sustainability to fair labor practices. MoxyVote even provides portals by which investors can vote on activist agendas.

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