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. NEW YORK ( TheStreet) -- It is one of the most persuasive examples we've seen of the current power of shareholder activism because it involves a company whose investors typically exhibit an almost religious allegiance to the corporate leadership and its products. In late February, it was reported that Apple ( AAPL) agreed to investor demands requiring a majority share vote in order for any candidate to be elected to its board of directors -- not just a simple plurality. It's no longer enough to get more votes than the other guy. Now you need real shareholder consensus on any appointment. This change, rebuffed by Apple last year despite shareholder support for it, was spearheaded anew in 2012 by the California Public Employees' Retirement System (CalPERS), the largest U.S. pension fund and Apple's biggest investor. While Apple had originally warned that a majority mandate would create legal problems, the company responded well at day's end, accepting the decision with a cheery comment by general counsel Bruce Sewell that "this is Apple and we don't let complexity get in our way."
Apple's recent turnabout on a shareholder voting issue underscores the strength of shareholder activism.
Probably not, but the change at Apple underscores a fundamental power shift that goes beyond this one specific issue and provides a dramatic, hardly unique example of how ongoing shareholder activism has by no means abated over the last two years and continues to be strong in the wake of Dodd-Frank and the Consumer Protection Act. The message from academe is that "the traditional board centric model of corporate governance continues to gravitate toward a paradigm that includes an increased role for shareholders." Translation: boards and management are now compelled to answer to often dissident shareholders demanding greater influence over the companies in which they invest. In this climate, boards must engage more directly with investors, and increase the frequency -- and enhance the quality -- of shareholder communications. To be sure, 2012 has already seen its share of hectic shareholder activism in advance of this year's proxy season. In January, Illinois Tool Works ( ITW), another perennially successful company, reached agreement with Relational Investors to allow it to nominate a board member in return for keeping its stake in the company below 10% and otherwise abstaining from commencing a proxy battle on corporate strategy.