Review of Dear Chairman

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Once upon a time, shareholders had little say in how companies allocated capital. Power resided with the CEO and the board of directors. They determined whether to expand, consolidate or acquire. They often utilized irregular financial reporting to disguise a company’s true value. Columbia Business School adjunct professor Jefferson Gramm, who runs a hedge fund, cites written correspondence between activists and executives – hence the salutation in his book’s title – to frame this detailed study of the evolution of shareholder activism. Although those with sophisticated knowledge of financial instruments will benefit most from the material, getAbstract recommends Gramm’s engrossing tales of financial combat to business professors and students, corporate investors, and anyone who finds war stories of money, power and intrigue fascinating.

About the Author

Jefferson Gramm, adjunct professor in value investing at Columbia Business School, runs a hedge fund and has served on several public-company boards of directors.


Gramm teaches these history lessons about landmarks in the evolution of shareholders’ rights:

1. Benjamin Graham launched “modern shareholder activism”.  

In 1926, professional investor Benjamin Graham went to the Interstate Commerce Commission (ICC) in Washington, DC to study the balance sheet of the Northern Pipeline Company. The stock hovered at $65, but Graham learned that the company made more than $6 per share annually and pocketed millions from security investments that it didn’t share with its stockholders. Gramm explains that shareholder activism was still rare in the early years of the 20th century, and the powerful Rockefeller Foundation controlled Northern through its 23% ownership stake. Graham, father of the hedge fund, pioneered shareholder activism as an investment tactic. He proposed that Northern pay $90 to investors for each share worth $65 on the market. Management rebuffed him, so he bought more shares and won two of the five seats on the board. Shortly after the annual meeting, Northern Pipeline proposed a plan to dispense money to shareholders. In a new victory for shareholders, Graham won against the Wall Street status quo.

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