Post by @financefunfacts

Benjamin Graham waged a proxy battle at Northern Pipeline in 1926. This is how Warren Buffett's mentor wrote the opening salvo to decades of shareholder activism that followed. In 1926, Benjamin Graham discovered that the Northern Pipeline Company, which was 1 of 8 pipelines that had formed after the Supreme Court broke apart John D. Rockefeller’s standard oil monopoly, was trading for $85 per share, the company had a $90 per share worth of cash and investments, in addition to profitable pipeline business! Graham calculated that the company could safely distribute upwards of $90 per share and remain a debt-free company. In Jan 1927, Ben Graham made his way to Northern Pipeline’s annual meeting of shareholders to make his case about how management could unlock an enormous amount of shareholder value. But Graham was brushed off as a gadfly and the meeting was adjourned before Graham could make his case. You see, management was perfectly comfortable sitting on a huge pile of cash so they could continue receiving large salaries and bonuses, even if the pipeline business started performing poorly. Following this incident, Graham was frustrated but undeterred. He massively increased his stake in the company and decided he would run a proxy battle for 2 of the 5 board seats. To acquire the shareholder votes needed for his campaign, Graham contacted the Rockefeller Foundation, which was the single largest shareholder with 23% ownership. But after Graham met with the foundation, they said they were passive owners and didn’t intervene with management’s day-to-day operations But Northern Pipeline had other shareholders - a total of 1909 to be precise. Graham went around and spoke with as many as he could. When the next annual meeting rolled around in Jan 1928, Graham and the coalition of shareholders he’d built came out victorious. The incumbent leadership admitted defeat, and several weeks later, management presented a plan to distribute cash to shareholders. $CVX $XOM $BP $MPC $COP $XLE #BenjaminGraham #ProxyBattle #CorporateHistory #ActivistInvesting #NorthernPipeline #StandardOil #ShareholderActivism #InvestmentPioneer #FinanceHistory #ProxyFight #ActivistInvestor #CorporateGovernance #FinanceLegends