ImClone, Lilly, and the Interests of Shareholder
Here’s a good story about the (non)protection of shareholder interests, and the (non)homogeneity of shareholder interests.
From Forbes.com: Potential Roadblock For Imclone Deal.
Although it spent weeks teasing investors about the identity of its suitor, ImClone failed to satisfy all of its shareholders that a $6.5 billion bid from Eli Lilly fairly values the biotech business.
A pension plan, the State-Boston Retirement System, has filed a lawsuit in the New York State Supreme Court against the directors of ImClone … including its billionaire chairman, Carl Icahn, and against Eli Lilly … claiming that the biotech ‘s board failed to live up to its fiduciary duties when pursuing the offer and did not provide the necessary information to shareholders to make a proper decision.
The standard folk-view of the corporate world is that corporate boards are obsessed with pursuing the interests of shareholders — indeed, many people seem to think that the pursuit of profits for shareholders is the source of all corporate evil. Yet here’s a story where a group of shareholders feel like their interests are emphatically not being protected by the board.
Another standard element of the folk-view of the corporate world is that shareholders are a relatively homogenous group, all with roughly the same interests. Here, again, this story provides a counter-example. Icahn, chair of ImClone’s board, is also a very significant shareholder. (According to the WSJ, “Icahn owns 11.67 million shares of ImClone”.) Yet the shareholders represented by the SBRS seem to think their interests are not at all well lined up with his.
As always, the world is a somewhat more complicated place than is typically thought.
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Thanks to Pharmalot.
The Business Ethics Blog 
Chris,I think you are right on the money here, particularly with regards to your second point.You often hear stories about activist shareholders who own a significant but far from controlling percentage of a company’s stock (say 10 or fifteen per cent) agitating for certain company actions, such as corporate de-mergers or asset sales.The question which boards must ask is whether such actions are in the best interests of the broader shareholder base, not just one particular influential shareholder.