Statement of Corporate Governance Principles

Manifesto?

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I bet a slew of you saw this advertisement on the back page (behind the editorials) of the US’ major papers recently.

Statement of Corporate Governance Principles

It purports that the business leaders plan to improve how their corporations are governed (here is a link to the 9 page ‘manifesto’), claiming they will exercise common-sense standards.  To run their companies properly and ethically.  Want to buy a bridge in Arizona?

First of all, these 13 business leaders are reacting to the pressure that corporate raiders- and some individual stockholders- are putting on their firms.  Demanding they stop overpaying their executives for poor performance.  Demanding they choose qualified and involved executives for their boards of directors.  All things these “leaders” detest.  Because they can’t run the companies as their personal toys.

I, for one, have had an argument with friends for years.  They think- as the public companies continually attempt to brainwash them (and you)- that stockholders own the company in which they hold stock.  BS!

If the stockholders did own the firm,  then dividends would be paid to the stockholders first- with commensurate funds used to reward executives for their performance.  Instead, executives get insane “bonuses” on top of their payroll compensation- even when the firms perform abysmally.  And, these same executives name their allies to their boards- so their pay continues its skyward trend and no one second guesses the actions.  Those same corporate boards also never question the payment of funds to ALEC,  to political action groups, to anti-union groups- instead of allocating those corporate funds for dividends- or subjecting such “donations” to stockholder votes.

Nevertheless, some of these manifesto recommendations are surprising valid.  They actually call for directors to be compensated by company stock- so their goals will match those of the corporate investors.

The manifesto also demands  clawbacks- methods to recoup executive compensation when earnings are restated downwards.  (Many of you will recall my post noting the Monsanto executives voluntarily did just that- when they found their underlings had deliberately misstated sales.  And, that Volkswagen did exactly nothing [expect maybe have their executives participate in their emissions scam].)

One of my absolute favorites found in the manifesto is to finally elect directors by majority vote.   Even after many of these same folks resisted the effort for years. But, they didn’t include proxy-access, which would afford long-term shareholders the right to place nominees for directors on the proxy ballots.  (Which, of course, means continued cronyism on corporate directorships.  Despite the proclamation that directors should be loyal only to the stockholders and the company.)

Or, the fact that the group did not call for having separate CEO’s and Board Chairpersons.   Because many of these same business leaders would have to relinquish one position- even though such a division has been shown to be better for corporate governance and operational performance.

Now, let’s see if there will be any real action- other than these ‘grand’ statements of principle.

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7 thoughts on “Manifesto?”

    1. And, since words are cheap, you can bet which choice these guys will take. (About the same way they choose to NOT use GAAP when business is not up to par- so they can also garner those outrageous bonuses.)

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