By David Benoit
Ralph Nader, the longtime consumer advocate, is opening a new
front in his corporate-reform crusade.
Mr. Nader, who grabbed headlines last week when he came out
against Liberty Media Corp.'s takeover bid for Sirius XM Holdings
Inc., said in an interview that he's seeking to put together a
shareholder-activism group. As part of that effort, the 79-year-old
has pledged 1% of his financial net worth, or roughly $50,000, in
each of the next three years if a group of 15 to 20 others will
join him to raise a total of about $10 million. He proposes to
create a group he calls the Penny Brigade--shareholders would
pledge one penny per share of stock they own--to raise an army of
500 people who would push companies to increase their dividends,
rein in executive compensation and give shareholders a greater say
in other governance decisions.
Mr. Nader says the idea for the group was born after he
successfully pushed Cisco Systems Inc. to boost its dividend in
2012.
And he has now entered into the mergers-and-acquisitions game,
threatening legal action over a bid from Liberty Media for the
roughly 48% of Sirius XM Holdings it doesn't already own, an offer
he says is too low.
Mr. Nader called the offer, valued at about $3.68 a share,
"ludicrous" and added: " Carl Icahn--take notice and interest." Mr.
Icahn, the 1980s corporate raider, has also reinvented himself as a
shareholder activist, and he has successfully challenged a host of
companies in recent years.
Mr. Nader says he bought Sirius shares more than four years ago,
when the company was struggling and before Liberty Media stepped in
with a loan to keep it afloat. Mr. Nader credits Liberty Media with
saving Sirius, but believes shareholders deserve more in the
proposed deal. This week he sent a letter to top Sirius
shareholders asking for support.
Liberty Media said in a statement that the all-stock offer
allows shareholders to "continue to participate in the success of
the Sirius business" and noted it was confident shareholders "will
see the significant benefits." Sirius declined to comment.
While many institutional shareholders have become more vocal in
recent years, Mr. Nader believes they still haven't gone far enough
in asserting their rights. Launching into a detailed history of
corporations in America, he said that companies today have "more
and more power and less and less responsibility."
Whether Mr. Nader, who is credited with helping make cars safer
and being an early environmental activist, succeeds in his latest
quest remains an open question. A similar group started in 1986 by
former corporate raider T. Boone Pickens, the United Shareholders
Association, claimed 65,000 members. Run by Ralph Whitworth, now a
prominent investor activist himself, the organization disbanded in
1993 saying it had achieved its goal of boosting shareholder
rights.
A study in the Journal of Financial Economics in 1996 said the
United Shareholders Association succeeded in improving governance
and boosting shareholder wealth, reaching more than 50 settlements
with companies. The study credited the group with working
productively with institutional shareholders.
Some question if Mr. Nader, a five-time presidential candidate,
is the best person to form the successor to that alliance.
"I don't think that he has credibility to the institutional
investor community," said John C. Coffee, a professor at Columbia
University and shareholder-activism expert.
Mr. Nader says that is why he's seeking help from old friends
like Robert Monks, a former official in the Reagan administration
and founder of influential investor-advisory firm Institutional
Shareholder Services Inc. Mr. Nader also says he'll look to stay in
the background of his new venture.
Mr. Monks, who was a classmate of Mr. Nader's at Harvard Law
School, said he is encouraged Mr. Nader is focusing on shareholder
advocacy.
"There is an absence of leadership," Mr. Monks said.
Arthur Levitt, the former chairman of the Securities and
Exchange Commission, said he would be inclined to support such an
organization, but he said he needs more details from Mr. Nader and
cautioned that there "is a line between shareholder activist and
interference with management."
Mr. Nader said the financial crisis is evidence that boards
don't deserve deference.
"Look at your own history and stop bragging," he said. "It's
just like thinking factory workers have nothing to put in the
suggestion box about making the factory hum better."
Write to David Benoit at david.benoit@wsj.com