Written Critique of
STUDY FINDS GIVING MORE POWER TO INVESTORS HAS PRODUCED BETTER RETURNS THAN PROTECTED MANAGEMENT
By Juan D. Hernandez

This piece published in the Financial Times in November 09th, 2001 issue, argues that companies that are pro-shareholder tend to outperform pro-management based firms. It is based on a survey of 1500 companies in the 1990’s by Andrew Metrick. This article describes quick reasons of why pro-shareholder firms out perform pro-management firms. It also names big name companies and where they rank and what they are considered. Management in pro-management firms in this article are perceived as dictators, because they seem to do anything to stay in power. They will sell stock to their shareholders at a discount so they would keep that manager or board in power. They also set decision approval for any management changes at a super-majority vote, which is at according to this article at 66 to 85 percent, vice just the majority. The author of the article also talks about the great compensations these managers receive when they get fired or demoted as signs of pro-management firms. He then moves on to show the effects of the market downturn and of course, Enron, which we all know changed a lot of things and created a lot of more laws and raised shareholder rights. The author also discusses how shareholders began asserting their rights and power especially in the HP merger with Compaq. HP is described by the author as one of the most shareholder friendly companies in the 90’s according to the Metrick’s study. In conclusion, this article is about how pro-shareholder firms outperformed pro-management firms in the 90’s. This article describes pro-management firms as communist firms who just care about themselves and not the shareholder, and will do anything to stay in management. Pro-shareholder firms that gave the