Shareholder activism and access are on the rise—and not just from the Elon Musks of the world.
Last year, an activist investment firm with a mere .02% of ExxonMobil shares successfully installed three new directors at the oil company to prompt action around climate change. The strategy was brilliant: the hedge fund convinced two large shareholders that Exxon needed to shift its energy strategy for its long-term health, given the decreasing demand for oil and gas as energy sources as well as Exxon’s poor returns on investment over a 10-year period. The proposal went beyond the issue of climate risk and focused on how to keep Exxon viable for the next 20 years and beyond.
Along with increasing shareholder activism, we are also seeing more democratization of access to shares through fintech apps such as Robinhood, Public.com, Stash, and Bumped. Robinhood also has a shareholder voting mechanism that allows its member shareholders to use the shares in their account to vote on issues and proposals. Public.com’s success in building up its base of retail shareholders in specific companies resulted in the CEOs of those companies hosting dedicated “Ask Me Anything” sessions for the group.
SHAREHOLDER ACTIVISM AND THE GIG ECONOMY
Shareholder access and activism are also gearing up in the gig economy. Gig workers who drive for Uber and Lyft can flip on the app whenever they need to work without worrying about having a boss or keeping to a schedule. That flexibility is paramount, but there are trade-offs.
When you work full-time for a company, there is typically a cohesive human-resource function or a union that overlooks your well-being. That doesn’t exist in the gig economy, which is an independent contractor market. The workers are disconnected, and there’s no underlying fabric bringing them all together. There isn’t a human resources department that looks out for them or a union that advocates for them. They don’t have a safety net.
But now we have technology-enabled mechanisms that can give these workers a voice in the decision-making process through owning shares in the companies they earn from. These mechanisms are pathways to change, providing more opportunities to build wealth as well as governance and a voice in these companies.
For gig workers, owning stock in these companies can be life-changing. Becoming a shareholder can provide them with a sense of purpose and ownership compared to feeling that they’re an expendable resource.
BENEFITS FOR COMPANIES
Giving workers ownership also benefits companies. Rideshare and delivery companies—including Uber, Lyft, DoorDash, Instacart, and even Amazon—rely heavily on labor. The services they’re selling are not just a ride or a food delivery; it’s access to a person’s time.
For companies that depend on gig workers, recruitment and replacement of the labor force are constant. It’s also a top cost; Uber, Lyft, and DoorDash run constant promotions and marketing campaigns to find the next cohort of drivers.
Many drivers have a love-hate relationship with the companies with which they contract. There’s a lot of discontent around the fees that they get charged. I believe Uber and the like would be better positioned if there was alignment between the companies and their drivers, instead of the “us versus them” attitude many drivers harbor currently.
For example, if the sustainability of Uber as a business were important to drivers, the conversation could evolve. Right now, drivers may not care about the sustainability of the business if they can’t get past thinking Uber is a multi-billion-dollar company taking too much from their earnings. Giving these drivers a share in the company and a voice is a step in the right direction.
In tech companies, it is common to give stock options to your employees and allows them to feel a sense of long-term alignment with what the company is accomplishing. Drivers on these apps can be given the same option. Uber wins if its drivers feel valued. Drivers win if Uber succeeds.
I believe there needs to be more ways to democratize shareholder rights for individuals. Even the Securities and Exchange Commission is on board; in September, it announced amendments to modernize the shareholder proposal rule, citing “changes in communication methods and technology, as well as the methods investors, particularly retail investors, use to access our markets.” The SEC sees this as a net positive, as it looks for ways to break up the large institutional holds on share ownership and give more individual shareholders—those that own a unit of a pension fund, for example—the ability to speak as an individual and not just through the pension fund.
Shareholder rights matched to labor can be used as a tool to drive change, both for workers and the company. Third-party mechanisms can be leveraged to drive more ownership, alignment, and participation so a broader set of people can see their views reflected in company decisions. Stock can also be issued to gig workers as a reward program where they can earn stock incrementally over time as they continue to work.
Rideshare companies have created fantastic consumer service apps. It’s important to ensure a second-class labor force is not created while fostering this consumer good. Giving gig economy workers access to shares can elevate their status from potentially feeling like a pawn to being an owner. Doing so can offer these workers the opportunity to have a voice, accumulate wealth, and benefit from the value they are helping build while helping companies develop a labor force that is sustainable for the long-term.
Matthew Spoke is the Founder and CEO of Moves—the only all-in-one financial app helping gig workers manage their business and get ahead.