SHAREHOLDER activists such as Carl Icahn (pictured) used to be seen as capitalist villains, known as "corporate raiders" and "greenmailers". Now even the head of the Securities and Exchange Commission, America's main markets watchdog, says they have shed their "distinctly negative connotation" and may be a force for good by helping improve how public companies are run. What changed?
Back in the 1970s and 1980s, when Mr Icahn and other veteran shareholder activists were starting out, they often did seem to be getting rich at everyone else's expense, even their fellow shareholders. Typically, they would buy a chunk of shares in a company and then threaten to kick up a fuss about how badly run it was. Rather than face months of bad headlines and distraction, management would often persuade the raiders to go away by paying well above the market price for their shares. Other shareholders did not benefit from this—indeed, in effect they paid for it, so "greenmailing" was soon ended by a combination of peer-group disapproval and regulation. [MORE]