What is ‘Gadfly’
Gadfly is a term for an investor who attends the annual shareholders meeting to criticize the corporation’s executives. Named after small insects that bite and annoy livestock, the gadfly looks to irritate a corporation’s management until it acts or compromises on shareholder concerns. A gadfly addresses many issues for the shareholders, often raising questions to management about specific company policies or corporate governance.
Questions regarding executive compensation or inconvenient annual meeting locations are often brought to light by a gadfly. A gadfly adds value for other shareholders by vocalizing his concerns and inciting action. Gadflies are activist shareholders who advocate for changes in corporate governance by offering proposals for votes at annual meetings. Proposals offered by shareholders must be placed on the agenda and offered up for a vote at the next annual shareholders’ meeting. Because most proposals raise issues company management tend to avoid, they often trigger a confrontation, forcing management to urge the shareholder base to vote it down or act on a compromise. Most proposals center on environmental concerns, social responsibility, corporate political spending or lobbying, executive compensation, proxy access, special meetings or voting rules.
The Impact of Gadflies on Corporations
Proponents of shareholder activism contend corporate gadflies are at the heart of a rising shareholder democracy that focuses attention on key issues that would otherwise remain obscured. Gadflies play a key role in empowering small investors against corporate managers who may not be acting in their best interests. Most gadflies tend to focus on issues of a religious, public policy or social investing nature, but issues centering on corporate governance policies, such as executive compensation, are more likely to gain traction with voting shareholders.
- Global gadflies: Applications and implications of US-style corporate governance abroad – heinonline.org [PDF]
- George Seldes: Propaganda analyst, press gadfly – www.tandfonline.com [PDF]
- From Gadfly to Nudge: The genesis of libertarian paternalism – heinonline.org [PDF]
- From the voice of a 'socratic gadfly': A call for more academic activism in the researching of disability in postsecondary education – www.tandfonline.com [PDF]
- A Vexing Gadfly: The Late Kierkegaard on Economic Matters – www.tandfonline.com [PDF]
- The gadfly business ethics project – www.jstor.org [PDF]