Shareholder “Rights”

As this column recently observed, owning stock has in recent years come to seem like a vaguely populist act. Certainly some of the more overused rhetoric around stock-buying reinforces this idea. The most striking examples are spinoffs of the concept of “shareholder rights,” which is a perfectly useful notion in the context of company management’s abusing its position for personal gain at the expense of a company’s health. Management is obliged to shareholders, shareholders have a right to see their investment well treated, a company must “build value” for shareholders, and so on. This all sounds so pleasing–as though maybe shareholder rights are kind of like, you know, civil rights or something–that the idea has become a bit of a catch-all. But this rhetoric is used, from time to time, in a way that makes it painfully obvious that “shareholders” and “humanity in general” are not synonymous.

A striking example of this occurred in yesterday’s New York Times, in a long story contending that big drug companies do very little to develop treatments for certain ailments affecting the Third World, for the simple reason that such drugs are unlikely to be monetary “blockbusters”–as, say, a really great anti-baldness pill might be. Surprisingly, a spokesman for one drug company, a French-German firm called Aventis, actually had the courage to respond to this contention head-on. “That’s not completely wrong. We know what’s happening in the third world, but we don’t act,” he is quoted as saying. “We can’t deny that we try to focus on top markets–cardiovascular, metabolism, anti-infection, etc. But we’re an industry in a competitive environment–we have a commitment to deliver performance for shareholders.”