The New Capitalists: How Citizen Investors Are Reshaping the Corporate Agenda [Hardcover]

Stephen Davis (Author), Jon Lukomnik (Author), David Pitt-watson (Author)

Book Description

Publication Date: October 1, 2006

Thanks to the rise of mutual funds and retirement plans, the actual owners of the world's corporate giants are no longer a few wealthy families. Rather, they're the huge majority of working people who have their pensions and life savings invested in shares of today's largest companies. These grassroots owners have ideas about value that differ from those of tycoons or Wall Street traders. And corporate directors and executives are coming under increasing pressure to respond. The New Capitalists provides examples-from GE to Disney to British Petroleum-of enterprises whose shareholders have recently wielded their control in ways unimaginable just several years ago. Authors Stephen Davis, Jon Lukomnik and David Pitt-Watson describe how civil ownership will profoundly alter our world--including forcing the rise of a new species of corporation. It has already begun demolishing old rules and habits, laying the groundwork for a new "constitution of commerce." The authors spell out conventional thinking destined for extinction--and fresh strategies companies must implement to survive in the emerging "civil economy." They also outline how investors, advisors, activists, and policy makers can make their voices heard.

Editorial Reviews

Review

"...a fine, richly reported account of how things do and should work in a very imperfect shareholder democracy." -- BusinessWeek, December 2006

"...a seductive concept... Davis, Lukomnik and Pitt-Watson are no fools." -- Bloomberg, January 18, 2007

...a vision of a new "civil economy", the goal of which is sustainable prosperity brought about by "responsible management". -- The Financial Times, November 1, 2006

A groundbreaking work, a new generation's extension of "The Unseen Revolution," Drucker's revolutionary 1976 book that predicted the influence of pension funds on corporations. -- Pensions & Investing, October 30, 2006

From the Back Cover

“A compelling read and an important book, The New Capitalists exposes weak links in business accountability that drain value from the economy. More importantly, the authors uncover ways that investors, corporations, and others are installing fixes. Ultimately, the authors present an optimistic view of the ability of capitalism to evolve and suggest specific ways we can help to realize that optimistic future.”

—Richard C. Breeden, former Chairman of the U.S. Securities and Exchange Commission

“The New Capitalists provides a pointed, powerful critique of the failings of our corporate and investment systems. No citizen who cares about returning efficiency and sound trusteeship to commerce and finance will want to miss this book.”

—John C. Bogle, founder and former CEO, The Vanguard Group

“Finally, a way people can safeguard their savings. Davis, Lukomnik, and Pitt-Watson present sound evidence that only responsible shareowner activism, driven by citizen investors, can demand the accountability necessary to keep markets free and efficient, thereby serving everybody’s interests. Everyone should read this book.”

—Bill Crist, Past President and Chairman of CalPERS; current Executive Vice President of Governance for Owners USA

“Well-written and engaging, thoroughly researched and provocative, The New Capitalists illuminates the web of intersecting interests now changing the way corporations are governed. This is a keenly crafted guide for corporate leaders who want to manage their businesses not only quarter to quarter, but also generation to generation.”

—Hank McKinnell, Chairman and CEO, Pfizer Inc., and Chairman of Business Roundtable

“Companies have become as vital to society as governments, but their managers face intensifying pressure to be accountable. Finally, here are insights into the ways investors are making that happen. In The New Capitalists, corporate executives, shareholders, politicians, and citizens alike will find the pointers they need. The reward is nothing less than the chance to make globalization safe for both profit and social equity.”

—James D. Wolfensohn, Chairman, Wolfensohn & Company, LLC, and former President of the World Bank

See all Editorial Reviews

Product Details

• Hardcover: 288 pages
• Publisher: Harvard Business Review Press; 1 edition (October 1, 2006)
• Language: English
• ISBN-10: 1422101010
• ISBN-13: 978-1422101018
• Product Dimensions: 6.3 x 1.2 x 9.3 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #1,819,938 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

7 of 8 people found the following review helpful

4.0 out of 5 stars Clarifying the role of the true company shareowners... November 11, 2006

By Thomas Duff HALL OF FAMETOP 500 REVIEWERVINE™ VOICE

Format:Hardcover

I will admit to thinking that pension funds like CalPERS were a bunch of meddlesome activists who were throwing their weight around. But after reading The New Capitalists: How Citizen Investors Are Reshaping The Corporate Agenda by Stephen Davis, Jon Lukomnik, and David Pitt-Watson, my views have been significantly altered. The true owners of corporations are now stepping up and demanding accountability.

Contents:
Part 1 - The New Capitalists: The Civil Economy - The Democratization of Ownership; Business Past - The Uncivil Economy
Part 2 - The New Capitalist Circle of Accountability: The Future Corporation - A Capitalist Manifesto; Institutional Investors - Mobilizing Ownership; Boards of Directors - A New Accountability
Part 3 - The New Capitalist Ecosystem: Monitoring the Market - The Information Moguls; Accounting Standards - Escaping Brother Luca's Boxes; NGOs and Capital - Civil Society Meets the Civil Economy
Part 4 - The New Capitalist Agenda: Action Memos - The New Capitalist Agenda; Epilogue
Notes; Selected Bibliography; Index; About the Authors

The authors start out by making the point that corporations are no longer held solely by rich individuals and families. The largest investors in many cases are mutual and pension funds that represent millions of individuals. The capital they provide are the savings and retirement dollars of the man on the street, therefore making people like you and I the real owners in corporate America. And rather than just being share"holders" looking for a quick trade, these large funds are becoming share"owners". They are demanding accountability from company management and the board of directors, and they will bring about change if it doesn't happen. The recognition of this ownership role (as well as the use of it) is leading to partnerships between groups that were formerly antagonistic towards each other. The new Capitalist Agenda that the authors advance is the roadmap for how both of these groups can work with each other and mutually benefit from the partnership.

I used to think that corporations should be relatively free to do what they thought was necessary to conduct business. But the abuses of Enron, WorldCom, and many others cured me of that misconceptions. Instead of viewing these funds as drains on corporate America, I now see them as a vital balance of power. The New Capitalists helped me to solidify those thoughts and clarify my viewpoints. An interesting read...

3 of 3 people found the following review helpful

5.0 out of 5 stars A powerful coupling of philosophy, ideal and business savvy. February 8, 2007

By Midwest Book Review

Format:Hardcover

The New Capitalists: How Citizen Investors Are Reshaping the Corporate Agenda tells of how smaller, grassroots business owners are blending the concept of value into their business, differing markedly from traditional Wall Street approaches and influencing the course of business ideas of achievement as a whole. Civil Ownership is powering a new idea of corporate structure and responsibility, and THE NEW CAPITALISTS documents this evolving change, making it an important acquisition for college-level business holdings seeking more than idealistic vision. Practical business applications that work well with value-added ideas make for a powerful coupling of philosophy, ideal and business savvy.

Diane C. Donovan

California Bookwatch

4.0 out of 5 stars Civil Economy Offers Hope May 22, 2007

By Vaishali Naroola

Format:Hardcover

The book titled `The New Capitalists: How Citizen Investors are Reshaping the Corporate Agenda' by Stephen Davis, Jon Lukomnik and David Pitt-Watson is progressive read in terms of explaining the rise of a new civil economy. It explains the Circle of Accountability to the new capitalists drawing parallels to a civil society. One thing is clear, that this book is published, that there are instances that have triggered this thinking, that there are rules, regulations, standards that are being rewritten, are all signs of progress.

That capital fuels reform is undeniable. Only now, the capital belongs to the working class as opposed to the individually rich. That corporate governance has a direct correlation to higher valuations of the company, other related benefits namely creation of more jobs is undeniable but what I found most interesting was that "momentum" of corporate governance reform at a company is a key influence on equity price performance.

I think the new civil economy affords new ways for investors to be engaged with a company but in the end it could come down to a matter of how many people can you actually have in the driver's seat as opposed to it being a matter of fair and complete disclosure and even then it might be open to interpretation.

Since the society and shareholder are one and the same, it follows that companies should act in the interests of society at large. These universal owners expect companies to perform a certain way, which is no different from what we know as common sense. For example, creation of value is not a new principle. It still is the appropriate way to behave. That there are myriad of standards to follow is itself a huge deterrent for a company. A possible solution might be the Global Compact, which is but slowly emerging as a standard.

In essence, the individuals who own stock in the biggest corporations of the world have a majority over the individual rich. However, to simplify the concept, I am gong to use an example. An individual A owns 2% GE vs. individuals B through Z who combined own more than 30% of GE. For the B-Z group to make a difference they have to work together and the way they do that is through institutional investors, web collaborative tools such as, Wikis, rating services, investor advocacy tools, independent auditors, audit certifying agencies and the like. These collectively are the new 'information moguls'.

The book nicely ends with a memo to the various players in the new economic ecosystem. Whether it is sustained, is to be seen in the future. For now, this book offers a lot of hope to someone who believes business does a lot of good for economies and societies.