This chapter, "Stockholder Season," recounts the author's experiences attending several corporate annual meetings in the spring of 1966. The author sets the stage by highlighting the immense power concentrated in the hands of a few large corporations and their professional managers, suggesting that these corporations wield a power comparable to medieval feudal lords. Despite this concentration of power, the formal structure dictates that ultimate authority resides in the stockholders, numbering over 20 million in the U.S. However, factors like stockholder indifference, ignorance, and sheer numbers undermine their power, resulting in near-unanimous votes for management-endorsed director slates.
The annual meeting, therefore, becomes the primary occasion for stockholders to exert influence. Intrigued by reports of a "new hard-line approach" from company management towards stockholders, triggered by unruly behavior at the previous year's meetings, the author embarks on a journey to observe these interactions firsthand. This "hard-line approach," characterized by ejecting disruptive stockholders, enforcing stricter meeting rules, and assigning task forces to control hecklers, seems designed to put the "theoretical holders of fundamental power" in their place.
The author observes a trend of companies moving their annual meetings away from New York, ostensibly to accommodate stockholders in other regions. However, the author suspects a connection between these relocations and the desire to avoid noisy, New York-based dissident stockholders. The author begins with AT&T in Detroit. The author notes the massive number of AT&T stockholders (almost three million) and the relatively small attendance at the meeting. The crowd is diverse, but notably lacking in representation from minority groups.
A significant portion of the chapter focuses on the dynamic between corporate chairmen and "professional stockholders" - individuals who actively participate in annual meetings by raising questions and proposing resolutions. The author describes these professional stockholders, notably Mrs. Wilma Soss and Louis D. Gilbert, as largely self-appointed representatives of a huge constituency that may badly need representing. While some of them are criticized for boorish and abusive behavior, others like Mrs. Soss and Mr. Gilbert, are recognized as well-informed, dedicated, and diligent critics, although their names are often avoided in official corporate reports.
The author describes interactions at the AT&T meeting, including complaints and interruptions from professional stockholders like Mrs. Soss and Mrs. Evelyn Y. Davis, and Mr. Capel's attempts to maintain order. The author notes the advantages companies gain by holding meetings away from New York: the ability to leverage regional pride against vocal dissidents. The author then attends the General Electric meeting in Atlanta where the "hard line" is demonstrated through controlled management of the meeting. Another meeting of the diversified pharmaceutical and chemical firm Charles Pfizer and Company, the author finds the most amicable. The last meeting the author attends is of the Communications Satellite Corporation where total chaos ensues.
The author concludes by reflecting on the value of annual meetings and the role of professional stockholders. While acknowledging that the professional stockholders are management's secret weapon, the author believes their dissent, though often abrasive, is a valuable function of the human relationship within business structures.