Activists put CEOs in a fishbowl

"Only companies that have found themselves in trouble are the ones who are the trail blazers" in embracing reform, Ward says. "Essentially, they're vulnerable. They're the weakest of the herd. If you're trying to get some governance change put in, they're the ones that you go to."

In principle, shareholders big and small alike have a voice in how a company is run. Each gets to vote on proposals that come before the annual shareholder meeting. If a shareholder can't attend the meeting, he or she may vote by proxy by filling out a ballot that arrives via postal delivery or e-mail, usually in February or March. Investors in mutual funds may "vote" by urging the fund, through its investor-relations office, to vote a certain way on resolutions pending at firms in which the fund is a stakeholder.

Still, even with new regulations increasing boardroom transparency, corporate America is no democracy. Shareholder votes are purely advisory and nonbinding upon a board of directors. What's more, because big shareholders get more votes than small ones, institutional investors such as mutual funds and pension funds tend to carry the most influence.

"I don't think that, as an individual investor, unless you're [billionaire activist] Carl Icahn, you're going to have much impact," says Jay Eisenhofer, a Wilmington, Del., lawyer who represents institutional shareholders and is author of "Shareholder Activism Handbook" (Aspen, 2005). "It's just not a realistic sort of goal.... You're much more likely to have an impact by having an association with an institution and influencing them to take action."

Increasingly, stakeholders are organizing with hopes of steering institutions to use their stock to advance an agenda. Retirees from Verizon and Qwest Communications, for instance, last year lobbied their respective boards to rein in rosy assumptions used in calculating a top executive's compensation package. Labor unions and the Sierra Club have embarked on new outreach efforts in the past two years to educate members about letter-writing campaigns and other tactics for influencing corporate directors. Amnesty International is beefing up its year-old Share Power campaign, which equips activists in about 30 groups with tools and strategies to nudge institutions to vote with human rights in mind.

"Because of the enormous power of multinational companies around the world ... we cannot have human rights gains without their cooperation," says Amy O'Meara, coordinator of Share Power. She's hopeful, she says, because with the rise of globalization "companies are really realizing that they are connected to these issues in ways that they weren't 20 years ago."

For investors interested in social issues, 327 resolutions at companies are awaiting action this spring. Many call for corporate reports on one of two issues: a firm's environmental impacts, such as having a role in global warming, or its political contributions. Among other closely watched issues is whether shareholders will gain more say in processes for nominating and approving directors who represent their interests on a governing board.

As shareholder activists learn to raise their voices, observers differ on whether the movement is coming to fulfill its potential as a force for positive social change. In the optimistic camp: the Rev. Michael Hoolahan, interim director of the Interfaith Center on Corporate Responsibility, where shareholder activism has been a priority since its inception in 1971.

"We see a burgeoning movement," Father Hoolahan says. "There are many, many new voices [over] what there were 10 years ago. It's really blossomed."

But activism consultant Bartlett Naylor sees a wealth of untapped power. Too often, he says, people otherwise interested in improving their society discard their proxy ballots as junk mail.

"It remains disappointing to me how much the average guy remains oblivious to the fact that the major force shaping public policy in America is the corporation," says Mr. Naylor, principal of Capital Strategies Consulting in Arlington, Va. "And the one time that the average guy has something to say something about that, he is throwing that chance into the trash."

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