Fifteen years after it was first chronicled, the “unseen revolution” transforming corporate ownership in the United States is now visible to all. The 20 largest pension funds (13 of them funds of state, municipal, or nonprofit employees) hold around one-tenth of the equity capital of America’s publicly owned companies. All told, institutional investors—that is, primarily pension funds—control close to 40% of the common stock of the country’s large (and many midsize) businesses. The largest and fastest growing funds, those of public employees, are no longer content to be passive investors. Increasingly, they demand a voice in the companies in which they invest—for instance, a veto over board appointments, executive compensation, and critical corporate charter provisions.
A version of this article appeared in the March–April 1991 issue of Harvard Business Review.