What is a Gadfly?
A gadfly is a shareholder who publicly criticizes a company's executives at the annual shareholders meeting.
How Does a Gadfly Work?
There are many famous gadflies, but one of the most notable was Evelyn Y. Davis, who spent 40 years confronting managers at annual meetings regarding their compensation and performance. Sometimes she wore costumes and bathing suits in the meetings to get attention. In one instance, she badgered the board of Bristol-Myers Squibb to change its corporate charter to require annual elections for all board members. She was able to get Dow Jones and a real estate firm to follow suit as well. In 2003, she made more than 50 proposals at various companies, including (but not limited to) AT&T, DuPont, Ford, and JPMorgan.
Why Does a Gadfly Matter?
Gadflies are annoying to management, but they are useful to the rest of us. They often draw attention to problems that others may have overlooked, and they can encourage action from other shareholders. Their courage to stand up and dissent is notable if not entertaining at times.