Thursday, June 30, 2011
The Appearance of Reality: A Conclusion
I have been thinking of a way to conclude the recent series of questions about corporate governance concepts on this blog and to me, this quote sums it up nicely:
“Our corporate statutes assume that shareholders own the corporation, that the rights and powers of shareholders flow from their providing “risk capital,” that directors shall manage the business and that officers are agents of the corporation under the direction and control of the board, with a duty to manage the corporation for the benefit of all shareholders. None of these claims are true.”( Flynn, John J., Corporate Democracy, Nice work if you can get it, at p. 94, 96 quoting Bayless Manning).
And so what are we left with? As far as I can see, we have a system that works well from the perspective of those who have the power to change it -- CEOs, self-perpetuating boards and other beneficiaries of the “club” – and all they gain is at the expense of seemingly powerless owners.
The indicators of continued corporate dysfunction:
· Self-compensation of executives
· Neither accountability nor liability of directors
· No effective enforcement of existing laws by government and continuing effective obstruction of enforcement through private litigation
At the end of the day it is quite simple: as simple as a superseding federal law that allows five % of the shareholders of a corporation to call a special meeting at which a majority acting may remove any or all of the directors with or without cause. But there is no such law and as long as there is no such law American shareholders will continue to be without meaningful rights and American corporations will lack the quality of accountability that makes their power legitimate in a democratic society.
What do you think?
June 30, 2011 in Disinformation
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