Can Democratizing Boards Fix Corporate America?

New York Times:

Let's say you own a small business, maybe the local car dealership, assuming it is still extant. One day, you are feeling pinched and sell some shares of the business to a few folks in town. To keep things on the up and up, you create a board.

Read the whole story: New York Times

Comments

[NevaforLeadership]

The shareholders own the company. The owners of the company should have ultimate say in how and who runs the company. Period.

Two problems: (1) The shareholders are fragmented and most of them don't have the slightest idea how to run a public company. (2) Through their stock options, executives very often hold the controlling block of shares and are able to lock in their positions and incompetence.

Thoughts:

(1) Do away with boards of directors. They have done a damn poor job of putting the breaks on management. Directors' stock options are often nothing but money-making scams for the directors. Directors' fees are out of proportion with their function. Potential directors' liability is growing out of all proportion to the role they have in the affairs to the company. Instead executive management could report regularly to panel of appointed representatives of shareholders, workers and the community, with a proviso that the panel consist of people with the necessary professional designations to understand the issues.

(2) Remove the votes from the shares of executive management while they serve their terms.

Off-the-top thoughts. Would love to hear feedback and thoughts.

[libmenace2012]

The correct story and headline should be: "Can Socializing Boards Fix Corporate America?"

[rtb61]

The correct story is actually much more down and dirty than that. What basically happened is the rich smart and ugly bought into the whole Hollywood celebrity hype and started marrying the poor, pretty and stupid especially celebrity versions, this resulted in several generations of rich, pretty (with sufficient plastic surgery) being left in charge of copious amounts off money, with little or no skill in managing it and ego driven greed like there was no tomorrow (not that they were capable of understanding or conceiving of the consequences of their ignorance). So basically the dumped all of money into the hands of a whole bunch of lying, cheating and stealing corporate executives who proceeded to rob them blind whilst promising the rich, greedy and stupid that they would make them all the richest people in the world simultaneously. Solution, that the rich and greedy, stop marrying the pretty and stupid and start creating generations of children that can actually manage the money they inherited ;D.

[SangZe]

We've been suckered by a lot of sweet talk with no substance behind it. Obama is a nice person. I like him. However, his policies stink.

[PhilipTaylor]

You forgot the Hedge Funds who measure their wealth in $Billions while running company after COMPANY AFTER BANK into or near Bankruptcy!

John Paulson $3.7 Billion in one year
George Soros $2.9 Billion in one year!

Average top Hedge Funds Scammers averaged $500 Million/year and paid simple capital gains Tax Rates of 15%!

No regulations of Hedge Funds EITHER!

[TJCole]

We don't need to democratize them, we need to de-fascist them...!

[schatsie]

Stupid is as Stupid Does....Wh­y did the FRENCH BANKS NOT FAIL,,,Why do the unemployed in FRANCE ALL HAVE HEALTH CARE?

Temptation works and feeds on the rest of us, ask the top 400 who doubled their incomes in 6 years from 125 milllion per year to 250 million per year and they will tell you that they worked twice as hard.....a­nd about their 6% tax cut, well they worked hard for that also,,,,the rest of us are all SLACKERS/S­uckers...

[PhilipTaylor]

You forgot the Hedge Funds who measure their wealth in $Billions while running company after COMPANY AFTER BANK into Bankruptcy!

John Paulson $3.7 Billion in one year
George Soros $2.9 Billion in one year!

Average top Hedge Funds Scammers averaged $500 Million/year and paid simple capital gains Tax Rates of 15%!

No regulations of Hedge Funds EITHER!

[FreedomCorpse]

who is on the board of directors or whatever won't change what trade policy has and is doing.

[PhilipTaylor]

Who set the trade policies? That is right the Wall Street owned Congress!

Senator Durbin says, "If you ever want to start a snake farm then introduce the Bill I introduced­."

$7.5 Million/4 years from Wall Street to our SENATORS on average

[PhilipTaylor]

The Wall Street Culture of decision making must change to include the impacts on humanity, the economy, and other Americans?

Other Board members should include interested parties; government regulator, consumer representative, and represenative(s) who guard the health&safety of the country and environment!

No upper to mid-level executive should be able to serve on the board of any other institution in their broad sector of the economy! They rubber-stamped each others compensation packages sapping profits out of the Banks and companies.

[argyle]

It is the beginning. Eventually no one will have to work as automatons in factories for 15 hours a day. We will need for all these people that don't need to work to have an income that isn't dependent on the government. We will need for people to own much more of the business in the world than they do now, while keeping capital private. These business, when they expand to the point that they need a board of directors need to have the ability to be influenced by those they serve other than in a consumer capacity. Democracy in the boardroom is the first step.

[SangZe]

The workers for a corporation should form a significant portion of its board.

[HisPetGoat]

I agree.

[BabblingBrooks]

Save corporate America?

1) No, not likely, as the people stuck on the boards will not, I predict, have the best interests of the company foremost.

2) It will be tough given the war on prosperity waged by the Obamians to save corporate America in the long run, though we may have a short-term improvement.

[DiogenesOfAlaska]

ok, so now the US is fighting three wars. One on prosperity. On which sides are the boardrooms? And the investors? Consumers? And what would you prefer? Are you a spy?

Maybe it's just like all the other wars: you can't really tell who is fighting whom, because it all makes no sense at all.

[NoFactsJustTruth]

One simple law that says no single individual may sit on the Board of Directors of more than 5 Fortune 500 companies at any one time, and perhaps an additional 5 non-500 companies, would remedy much of the redistribution and consolidation of wealth to the top 2% in OUR country. The other 98% that do most the voting need to realize that those 'top 2 percenters' care very little about what happens to ANYONE else in OUR country and the world - beyond their greed. I they did, they would also be trying to stop the legalized bribery of lobbyists that control OUR Congress. It too conveniently suits their needs.

[PhilipTaylor]

Why should anyone run one company and sit on the board of another!

No justification available!

[schatsie]

Absolutely correct, they are working too hard to be on the other boards of directors, right?

Or are they like the esteemed Bush taking 100 days of vacation a year...TEL­L ME HOW MANY DAYS do they use the CORPORATE JETs for work and how many for their GOLF outings...­.

[blood1]

Be honest, how many small investors take the time to really know who is on the Board of Directors each time you receive proxy voting material.

Take a close look...you will notice that the same name is on numerous BOD's. So now we have an "elite" group of individuals who's main job is to fly from place to place and essentially make management decisions on a wide variety of enterprises. Are they experts in ALL the fields, or have they just found a great way to make a lot of extra cash for doing very little.

There was to be some correction after the Enron debacle...­but nothing has really changed. The BOD's are getting cash and stock options and high level information across many sectors of the economy. To say that the FEW are manipulating the economy may be a stretch, but to say that a select group are dictating is absolutely correct.

I can't change the system, but I can (and do) vote against every current board member at each Annual Meeting using my proxy vote! I can't tell you what to do, but I do ask that all the small investors start paying attention to the incestuous nature of BOD's.

[DiogenesOfAlaska]

very true. They cannot possibly be doing their job. They have neither the expertise nor even the time, given their multiple affiliations. Enough said.

why is it so? Because they manage to tell the fairy tale that short-termism results from stupid investment decisions of ignorant shareholders.

That's nonsense. Of course short-termism must be counteracted. But the boardrooms are the last to ask for advice on how to do that. It's a cynical joke that they use this as an argument.

Your interpretation is exactly right: the reason is that not enough investors really care. And that's why they believe the fairy tale.

[HisPetGoat]

I think the very legal notion of "incorporation" which gives quasi-personhood and personal rights to such an impersonal thing as a business entity is dehumanizing and instrinsically wrong.

Corporations have no soul or conscience and are not "persons" in any sense except in the twisted minds of lawyers.

[JaneQCitizen]

I feel the same. Incorporation is a way for shysters to disavow any PERSONAL responsibilities for robbing people blind.

[schatsie]

Well they pierced the corporate veil to get CHARLES KEATING CONVICTED OF RACKETEERI­NG.....

[DiogenesOfAlaska]

True. Do you like it better to view it for what it is: a bundle of contracts?

[HisPetGoat]

Yes. And I think the people in decision making capacities should be more accountable, and bear more personal liability and personal risk.

[DiogenesOfAlaska]

The business roundtable should try a little game of musical chairs.

Let's recall: the roundtable was introduced into the King Arthur myth so that folks wouldn't freak out about the privilege of who gets the best seats.

A few centuries later, Oliver Cromwell did the 2+2 thing and made sure governance deserves its name again, based on the results of that calculation.

So yes, it's about time.