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Activists put CEOs in a fishbowl

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Columbia University freshman Nick Serpe doesn't own any stocks or mutual funds, but that minor point isn't keeping him from becoming a shareholder activist.

"The tuition we pay is going to the university endowment, so we do consider ourselves shareholders," says Mr. Serpe, who had never heard of shareholder activism six months ago. Together with other students, he's now calling on Columbia to use its clout as a big Chevron stockholder to solicit a report that would address, among other things, pollution caused by nearly three decades of oil drilling in Ecuador.

As winter winds down, activists of varied stripes are gearing up for a new spring season of shareholder meetings by linking up with allies and upgrading their approaches. They're tapping into new networks, formed in the past three years, to rally grass-roots investors behind various causes. They're also reaping the benefits of new disclosure requirements intended to demystify mountains of paperwork and legalese that have traditionally enshrouded the inner workings of corporate boards.

In the big picture, observers say, a multiyear trend toward holding management accountable is to some degree trickling down to strengthen the hand of those who actually own public companies: their shareholders. Corporate scandals in 2002 and 2003 led not only to the Sarbanes-Oxley Act, which tightened financial reporting requirements, but also to today's environment where investors can more easily make their voices heard.

"Sarbanes-Oxley essentially empowered directors" to oversee management more effectively, says Carol Bowie, vice president of governance research services for Institutional Shareholder Services, an advisory firm. "But shareholder empowerment is what's going on right now.... We are seeing directors respond to shareholders, and directors don't like to get low votes [on annual meeting agenda items]. So they respond to that."

Executive pay packages examined

This year, shareholders driven by social and financial concerns alike are targeting executive pay packages. Efforts to rein in compensation formulae have spawned 239 proposals, up from 175 in 2006, according to a mid-February ISS analysis. Nearly 1 in 4 of all 984 proposals filed at public companies this year addresses executive compensation.

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