Warren Buffett’s Stocks Went Down
https://www.bloomberg.com/opinion/articles/2019-02-25/warren-buffett-s-stocks-went-down [www.bloomberg.com]
2019-02-27 06:00
Also a poison pill, BlackRock private equity, Windstream and a decacorn.
Last year Sinovac Biotech Ltd., a U.S.-listed Chinese biopharmaceutical company incorporated in Antigua and Barbuda (why not), held an annual general meeting of shareholders to re-elect its board of directors. Some shareholders showed up at the meeting (in Beijing) and took the board by surprise by demanding to vote for different directors. This is generally viewed as somewhere between “extremely impolite” and “totally illegal,” because: Who goes to shareholder meetings? In most of the world, most of the time, the answer is almost nobody; all of the business of the meetings is conducted by proxies. If you want to nominate directors, you send in a notice months in advance, and navigate a bunch of tricky procedural formalities, and if all goes well you get to send a proxy card to all the shareholders asking them to vote for your directors, and if more shareholders send back proxies for your slate than for the management slate then your directors get elected. You don’t just show up at the meeting, nominate your directors and ask for a show of hands. The company’s managers will quite properly tell you that you are out of order, and you will respond “the whole system is out of order,” and there will be a lot of shouting and confusion.
And then it gets really weird.
We have talked a lot recently about the question of who controls a corporation, and I have consistently pushed back on the naive view that shareholders “own” the corporation and get to choose its managers and directors and control how it operates. Here some shareholders wanted to vote out the old directors and vote in some new ones, and their new directors got more votes than the old ones did, and not only did this not have the effect of replacing the old directors with the new ones, but the old directors have decided to punish the shareholders who voted against them by taking away some of their shares. Whatever is happening here, it is hard to see it as the shareholders owning the corporation.
source: ML