Robert Monks, who championed shareholder activism, dies at 91

Boston Globe

06-05-2025

Mr. Monks lost in the Republican primary - and again in another Senate bid in 1976 - yet he continued to mull what he saw on the campaign trail: the environmental scars from the paper plants and the lack of pressure for change from investors.
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One day at a meeting of the Boston Safe Deposit and Trust Company, where Mr. Monks was board chairman, he noticed that the bank's portfolio included a company linked to the 'industrial sludge' on the Penobscot.
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An idea took shape. Rather than taxpayers footing the bill for cleanup efforts, perhaps there was a way to force companies to change from within, he wondered.
'Informed shareholders could use their proxy power to force management's hand to clean up the industrial pollution,' wrote Mr. Monks, who died April 29 at his home in Cape Elizabeth, Maine, at 91. 'But none of us was doing it.'
He set aside his corporate roles and, in a bold switch, helped restructure the rules of engagement in American capitalism. Mr. Monks is widely credited with devising how to harness shareholder activism for a greater voice on issues such as company board membership, strategic priorities, and executive pay.
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The consultancies he founded, starting with Institutional Shareholder Services in 1985, remain a major force in guiding shareholding blocs - pension holdings, index funds and others - to influence how companies are run and who directs them.
Others took notice, too. Mr. Monks's vision of shareholder power indirectly opened the way for Wall Street insurgents such as Ivan Boesky and other corporate raiders of the 1980s.
Yet many market watchers and business scholars portray Mr. Monks as a transformative figure in modern commerce, helping bring greater accountability and investor confidence. Later, shareholder activism expanded to causes such as social justice, climate change, and workplace diversity - now setting a collision course with the Trump administration and its allies.
'[Mr. Monks] changed the entire relationship between the shareholders and companies,' said Charles Elson, founder of the Weinberg Center for Corporate Governance at the University of Delaware. 'He didn't just move the needle. He turned the needle into a wholly different instrument.'
Mr. Monks often described his goals in quasi-political terms, trying to stir 'democracy' in publicly traded companies that were long accustomed to setting their own agendas. A poorly run company has built-in myopia, he asserted.
It will seek 'unlimited life, size, power and license for itself' in the short term but pay little heed to long-range value and social good, he wrote in 'Watching the Watchers: Corporate Governance for the 21st Century' (1996), co-authored with his longtime associate, Nell Minow.
One of Mr. Monks's first major corporate duels was with one of the venerable titans of American retail, Sears. Mr. Monks contended that the Sears board was letting the chain stall in the early 1990s and questioned the company's non-retail acquisitions such as buying the Dean Witter brokerage.
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He mounted a shareholder campaign seeking to shake up the Sears board. Mr. Monks put himself on the slate of candidates.
Sears, under chairman Edward Brennan, spent about $2.8 million in a publicity blitz against Mr. Monks, who held just 100 shares. 'What Mr. Monk is really trying to do is change the whole corporate world,' Brennan said.
At the Sears annual meeting in 1991, Mr. Monks's bid for a board seat was rejected. He mounted another attempt in 1992. In The Wall Street Journal, he took out a full-page ad with the title 'Non-Performing Assets' under the outlines of the nine members of the board, which included Donald H. Rumsfeld, who had returned to private business after serving as defense secretary under President Ford.
Mr. Monks again was turned down for a board seat. 'No one wanted him on their board,' Minow told The Washington Post in an interview. 'He asked too many questions.' Under continued shareholder pressure, however, Sears restructured into a leaner operation and sold off assets such as its Coldwell Banker real estate division.
In 1999, Mr. Monks and Minow led another shareholder mobilization at the refuse and recycling firm Waste Management. A shareholder class-action suit alleged that company officials issued false and misleading financial statements to give a rosier picture of the company's fiscal health. Waste Management agreed in 2001 to a $457 million payment to settle the suit.
High-profile corporate meltdowns, such as the collapse of energy giant Enron in 2001,
brought demands for
greater corporate transparency and oversight. In Congress, the Sarbanes-Oxley Act in 2002 strengthened rules on financial recordkeeping and reporting for publicly traded companies.
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Mr. Monks largely dismissed the measures. 'Nothing is going to happen unless you involve yourself,' he told The New York Times. 'Democracy isn't going to work without involved citizens and corporations won't work without involved owners.'
He often paraphrased a comment from former Supreme Court Justice Louis Brandeis that there were no 'innocent shareholders.'
Mr. Monks had at least one high-profile misjudgment. At the diversified electronics company Tyco International, Mr. Monks had gained a board seat and became a supporter of a rising star, Dennis Kozlowski, who became chief executive.
Kozlowski spearheaded a $4 million donation to endow a school of management professorship at the University of Cambridge, which Mr. Monks once attended. Then in 2002, Kozlowski and a former chief financial officer, Mark H. Swartz, were indicted on federal charges of artificially inflating the company share price and siphoning off $170 million to buy properties and throw lavish parties.
They were convicted and sentenced in 2005. Kozlowski was released on parole in 2014; Swartz was paroled in 2013.
Mr. Monks had been voted off the Tyco board years before the scandals. But he said the wider lesson at Tyco was not recognizing the trends toward what he called 'the imperial CEO.'
'The CEO of an American company today has absolute power,' he told the Financial Times in 2005. 'As a director, you've really got to be alert and attentive to the potential for abuse of the situation.'
Mr. Monks also lamented the inability to rein in chief executive pay, which can often run into tens of millions of dollars with salary and stock compensation.
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'What is most objectionable and alarming is the failure of governance,' he wrote in his book 'Corpocracy' (2007). 'The illusion is that we have a system of checks and balances that oversees executive compensation and allows market forces to flow through fairly to the paycheck.'
Robert Augustus Gardner Monks was born in Boston on Dec. 4, 1933, and raised in Lenox in the Berkshires. His father was a priest in the local Episcopal church and became founding headmaster at the private Lenox School. His mother tended to the home and the family's many properties.
Robert's paternal family line was intertwined with prominent Boston clans such as Peabody, Lowell, and Gardner, including Isabella Stewart Gardner.
Mr. Monks graduated from Harvard University with a bachelor's degree in history in 1954 - the same year he married Millicent Carnegie Sprague, a granddaughter of Thomas Carnegie, the younger brother of Gilded Age industrialist Andrew Carnegie.
While at Harvard, Mr. Monks spent his summer breaks on work crews at an oil rig and a rail yard in the Midwest. Those jobs, he said, gave him a first glimpse into labor activism as workers demanded better safety measures.
He did postgraduate studies at the University of Cambridge - where he squeezed his 6-foot-6 frame into a racing shell as part of the crew team in events against rival Oxford. He returned to Harvard for a law degree in 1958.
He joined a Boston law firm and then moved into family-affiliated businesses that included an energy firm, C.H. Sprague & Son, started by the grandfather
of his wife. Mr. Monks later gained ownership of the company.
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During the Reagan administration, he served as director of the government-run Synthetic Fuels Corporation and as head of pension and welfare programs for federal employees. He made a third run for Senate, losing to Susan Collins in the 1996 Republican primary.
Among his shareholder initiatives, Mr. Monks co-founded Lens Investments and the analytical groups Corporate Library and GMI Ratings. His books on corporate governance include 'Citizens DisUnited' (2013) and 'The Emperor's Nightmare' (2022). He also wrote a novel, 'Reel and Rout' (2004), whose plot features shady corporate dealings.
'I've tried to expose the illusion of corporate democracy,' he told The New York Times in 2013. 'It's a cost to all of us.'
Mr. Monks's wife died in 2023. His death, from pancreatic cancer, was confirmed by his son, Bobby. He also leaves a daughter, Melinda Monks; three grandchildren; and four great-grandchildren.