Quietly, activist investors have been utilizing social media to overthrow boards, oust embattled CEOs, and reverse well-entrenched business practices at some of America’s most well-known corporations. And when it comes to digital savvy, they are often leaving their freedom-fighter counterparts in the dust.
Take the case of Eric Jackson, who in 2007 held only 96 shares of Yahoo stock and maintained a blog with about eight readers a day. On a whim, he wrote a post about dissatisfaction with CEO Terry Semel’s performance and the need for a management shakeup. His post went viral and struck a chord with other Yahoo investors who shared his sentiments. Before long, he was getting thousands of hits a day, being interviewed on CNBC, and had built a voting bloc of investors representing more than 2.6 million shares in the company (worth approximately $60 million). Not long after that, Mr. Semel stepped down and Mr. Jackson’s online efforts are widely credited as a catalyst in his downfall.
Since then, small investors have taken to Facebook and Twitter to build support for proxy proposals and sites such as Seeking Alpha, StockTwits and Wikinvest have emerged as venues for investors to discuss companies’ valuation potential and social responsibility efforts. Among the most interesting developments is MoxyVote, a social network of corporate shareholders and advocates that aggregates investor proposals, expedites proxy voting, and helps investors support “good causes” in the areas of labor, the environment, animal welfare, and corporate governance, to name a few. Notably, investors in On2 Technologies recently turned to MoxyVote to force Google to increase its bid for the company by 25%.