Corporate Reform Is Long Overdue: Am I Missing Something Here?

Friday 23 April 2010
by: Jack Lohman, t r u t h o u t Op-Ed

Perhaps I'm biased.
I bought $25,000 of stock in a corporation that I thought had a good idea. Little did I know that the CEO also had a second idea: to drain the shareholder value through high salaries and bonuses, and then put the company belly up. My money went down the tubes, as did many others, though the CEO and executives made out very well.
I don't like being ripped off, and few folks do. The Fat Cats know that's just part of the game, because they invented it. And they can afford to play it because they'll win more than they lose. They have these things like insider trading and cooking the books that keep them whole.
So, now Obama wants to take over the banks when they fail, and those shareholder values will go to zero even though they had no say in running the company. But the bankers and their bonuses for failure likely will survive, as they'll find ways to offshore their wealth.
Unfortunately, Congress seems not to want to protect the investments of shareholders, as the recent hit on our IRAs will attest. It's that free-market thingy, don'cha know? We should have known better.
It also seems that Congress has had a hands-off policy because the CEOs and boards finance their campaigns to a greater extent than do the shareholders. Campaign cash works as planned, and these CEOs are no dummies.
Corporations (and banks) have been taken over by CEOs and the buddy system, a board of directors where each member sits on each others' boards and each votes in favor of the others' pay package. Exorbitant salary, vacation and retirement benefits, stock options, and a handsome golden parachute in the event of an unfriendly takeover or forced change of command. Nice arrangement.
Like the CEO of UnitedHealth who reaped $100 million by exercising stock options. How nice is that?
And, oh, to ward off potential shareholder lawsuits that claim mismanagement, they hire an outside "compensation consultant" to provide a recommendation they can all live with and that will give the board legal cover in a lawsuit. And they pay these "consultants" very well to ensure an acceptable answer, which comes out of profits to the detriment of the shareholders they rip off.
So, we have Fat Cats funding the elections of the politicians who otherwise would pass laws to shield shareholders from corporate corruption. And, now, the Supreme Court guarantees that these corporations are to be treated like "people" and can give unlimited funds to back the elections of these same politicians.
Is this what they call corporate and political corruption?
The fix?
I'm sure there are many fixes, but the first is to give the owners (the shareholders) a binding vote on CEO, executive and board member compensation packages (including stock options and golden parachutes). The CEOs and boards should run the companies, but the rules should facilitate easy replacement of CEOs and board members in the event of poor management. And board members should be selected by the shareholders alone, rather than by conflicted CEOs.
As well, corporations may be people, but they can't go to jail. The CEOs, therefore, should not be able to hide behind the corporate veil, and if they are involved in wrongdoing they should spend the time in jail.
Lastly, the shareholders should have a binding vote over whether, and if so to what extent, and to whom, the company is going to bribe - er, contribute to - in the political system. The same should be true of union members when their dues are being spent on contributions. Nobody's money should be spent on politicians they don't agree with, with their money mandated by the personal whim of the CEOs.

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