Using the information you obtained in Part One and the discussions about corporate governance in Chapter 10, prepare answers to the following questions What is the degree of power that an investor such as Fidelity Investments has with respect to the board and top managers of firms such as GE or Microsoft?
• What limits the amount of power an institutional investor such as Fidelity has on firms in which it holds ownership positions such as GE and Microsoft?
• How much have shareholders (such as those holding positions in GE and Microsoft) benefited from the rise of institutional shareholdings?

As discussed in Chapter 10, institutional investors now play a significant role in terms of corporate governance. In particular, institutional investors have taken what are often substantial ownership positions in some the largest public companies in the United States. One reason for this is that these investors have large sums of capital that they need to invest to maximize the return to their shareholders. Thus, institutional investors such as large mutual fund companies, insurance companies, and retirement funds often own billions of dollars worth of stock in a company. For example, in 2005, Fidelity’s Magellan Fund owned over $2 billion worth of General Electric (GE) stock. Of course, the Magellan Fund is but one Fidelity fund. It is very likely that other Fidelity funds also have ownership positions in GE.
Along with this large stock ownership comes the potential to influence board of directors elections and shareholder resolutions. But is this large concentration of stock ownership something that really creates shareholder power? In this exercise, you will explore the extent of some institutional holdings and then consider the effects of those holdings on shareholders, board members, executives, and corporate governance in general.