Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism

HarperBusiness (February 23, 2016)

Today, no public corporation is too big to be attacked by shareholder activists. Every CEO and corporate director is a potential target unless they have secured voting control of the company. Some of the largest and most successful corporations in the world, such as Apple and Dupont, have recently faced pressure from angry shareholders. Microsoft even gave a board seat to an activist hedge fund that held less than 1% of its shares.

In Dear Chairman, hedge fund manager Jeff Gramm sharply portrays one of capitalism’s longest-running tensions—the conflicts of interest among public company directors, managers, and shareholders. The book explains how shareholder activism works, while giving historical context to today’s hostilities.

Gramm, who also teaches value investing at Columbia Business School, mixes never-before-published letters from Wall Street icons—including Benjamin Graham, Warren Buffett, Ross Perot, Carl Icahn, and Daniel Loeb—with masterful scholarship and professional insight to trace the rise in shareholder activism and provide an invaluable and unprecedented perspective on public company governance.  Warren Buffett gave Gramm permission to publish his 1964 letter to American Express, in which he discusses the company’s handling of the Salad Oil Swindle. Ross Perot sent Gramm a brutally direct letter he wrote to GM Chairman Roger Smith in 1985. Gramm even dug up a letter written by Benjamin Graham that has never been included in any of his collected writings and was not found by any of his biographers. Each chapter in the book provides a sufficiently deep dive to let the reader rationally evaluate the key players, their intentions, and their incentives.

Dear Chairman is essential reading for investors, corporate CEOs, and directors. But the book is also accessible to readers with no exposure to investing and finance. Gramm shows how shareholder activism challenges inefficient corporations that waste valuable assets, but also fosters destructive and destabilizing short-term strategic decisions. The business world is a messy place, and public companies are filled with contradiction and conflict of interest. The best place to study these peculiar institutions is at the fault line where shareholders and corporate managers and directors meet. In the pages of Dear Chairman, the reader gets to walk that line with Ross Perot, Carl Icahn, Warren Buffett and Benjamin Graham, among others. The book teaches us how American business really works, through the voices of its most interesting participants.