Once-reticent investors join shareholder revolts in the US

Every spring,corporate chieftains and their boards squash uprisings from a familiar batch of pugnacious investors,a ritual that shields many companies from major change.

This proxy season was different. In recent weeks,chief executives and directors have gone up against a more formidable foe than the typical corporate gadfly: the mainstream investor.

It is the changing face of shareholder activism. While proxy season has long been the domain of labour unions and activist investors with large personalities and forceful demands,increasingly it is mutual funds and other more tempered institutional shareholders who are criticising lavish pay packages and questioning corporate governance.

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Emboldened by new regulations this new crop of activists is voting down company policies and backing proposals to reform corporate boards. The movement has already stung a variety of companies,including Citigroup,Goldman Sachs and Wal-Mart.

At its annual shareholder meeting in Oklahoma City on Friday,Chesapeake Energy will confront an army of angry institutional investors shouting for a shake-up at the embattled company. Shareholders,already exercised about the companys underperforming stock,have seized on revelations that Chesapeakes chief executive took personal loans from the companys lenders.

The effort is bearing fruit. Attempting to placate detractors,Chesapeake agreed this week to shuffle its board. The move followed a string of shareholder triumphs at Canadian Pacific Railway,Barclays and others.

A series of recent management mishaps has given investors plenty of ammunition. At Yahoo,a firestorm erupted when it emerged that the companys chief executive,Scott Thompson,misstated information on his résumé. The hedge fund Third Point,a major Yahoo shareholder that started pushing for change earlier this year,called for Thompson to step down in May,which he soon did.

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Wal-Mart has faced intense scrutiny from shareholders. In the wake of bribery in Wal-Marts Mexican arm,the nations second largest public pension fund,the California State Teachers Retirement System,sued the firm and voted against its board members.

While the skirmish has yet to yield changes at Wal-Mart,other embattled companies are making concessions. Chesapeake this week agreed to eject four of its nine board members.

The company will replace them with members handpicked by its two largest shareholders,Southeastern Asset Management and Carl C Icahn.