CapitalistMarks

Power to the people! Shareholders that is.

Posted on 18. Jun, 2009 by scott in Social commentary, economic daydreaming, markets

I think it was Yoda who said “Power, with the people, is.”? If not he should have.

Today I want to further embelish my proposed new capitalism.? The issue now is public companies and the salaries and benefits they pay as well as the way the conduct business.

Adam Smith, John Meynard Keynes and John Kenneth Galbraith were all supportive of public companies.? I am too.? But not so much in the way they are run today.They aren’t for the shareholder that’s for dang sure.

The simple truth is that the laws, regulations and even traditions associated with publicly held companies in America are outdated.? “In the beginning” shares were sold by reputable owners to neighbors and friends (perhaps a few friends of friends).? The point then was that very little regulation was needed because? morality and personal obligation most often over-rode any potential greed or misconduct.? Owners and management were intended to benefit according to their contribution (i.e. capital, time, skill, technical know-how, patents and so on).? If things went bad, shareholders could walk right in to the presidents office (of the company they invested in) and complain or argue to effect change.? These conditions didn’t vary much for a long time and I will admit there will abuses.

The rules and regulations that have survived reflect this.

Now, we have huge multi-national corporations with millions of shareholders (individually or through mutual funds, retirement funds and such).? Most Americans today own shares in public companies directly or indirectly.? Even though we (shareholders) are entitled to attend the annual meetings and vote for selected issues and directors, the fact is that few, if any, of us do.? There are several reasons for this and among them are:? the meetings are in far off places and hard to get to (intentionally??), the shares (relatively) most shareholders have are insignificant to the whole, management drafts and controls the issues to be voted on or discussed at the annual meeting, etc. etc. etc.

Yet one very important thing has not changed in the 500 or so years of history associated with you and I owning shares in corporations — WE ARE STILL THE OWNERS!!? Yes, we put up the money and we should be getting the attention we deserve for doing so.

Few people really focus on that.? Management doesn’t.? The board of directors don’t.? The government regulators don’t.? And, conseqeuntly you and I don’t — and we should.

This has to change in the new capitalism ( see Capitalism Redux) that I have written about before and would like to see evolve during BHO’s first term.

What I am now going to propose may not be perfect but it is a good beginning point for the administration to restore shareholder interests.? And, by the way, this would have a tremendously positive impact on the stock markets — if for no other reason than we, the people, we feel like we have some real ’say.’

These changes would be required by the SEC (Securities and Exchange Commission) and every public company would have to follow them.? They would not have been possible twenty years ago but technology makes them easy today.

Here they are.

1:? Each public company would keep a current and accurate list of ALL individual shareholders (now the majority are invisible to management because their shares are only reported as consolidated in the funds that own them).

2: Each public company would be required to make the list readily available to every shareholder including contact information (most importantly email addresses, but the other stuff too).? Every shareholder would be able to contact and influence every other shareholder directly.

3: Each public company would provide immediate alerts of news to EVERY shareholder BEFORE it goes out to anyone else (or at least at the same time).

4: Each public company would maintain a fully functional website for shareholders and interested parties.? This site would facilitate communications, discussions and even debate through blogs, questions to management (the PR department anyway), and other such means.

5: Since every shareholder would have access to all the above, any single activist shareholder could conduct thier own campaign for change by communicating directly with his other ‘partners’ as well as management.

6: Every public company would be required to have a vote on any issue that a reasonable % of shareholders agree on –? and majority rules.? I understand that this might make annual meetings a bit more uncomfortable for management but if things aren’t going swimmingly for the shareholders then management shouldn’t be sleeping very good at night either.

The whole point of all this is to return control of the company to the owners — the shareholders.? Not day to day management, but real control of important issues like who is running the company and how much they are getting paid to do so.

Shareholders will have a say on compensation, on the board of directors . . . heck on just about anything that is really important.? AND THEY SHOULD!!!

This would stop the current trend of management ignoring shareholders to line their own pockets, to produce dangerous products, to take advantage of labor, to go offshore and avoid taxes . . . . . .

If we make such sweeping, consequential changes would we only be returning to the basics of true capitalism — the Adam Smith type that worked so well for so long.? People will chose the products, the strategies and the companies that they believe with their $$$.? Management will be responsible to the people (owners) and will get their butts kicked if they step out of line.? Hey, won’t it be great to get rid of all those obscene ‘golden parachutes’ interlocking boards vote for themselves!

I don’t want management, directors, huge hedge funds, mutual funds or large retirement funds (managed by their own ’select’ people) making decisions for me.? I WANT TO VOTE ON EVERY IMPORTANT ISSUE OF ALL THE COMPANIES I OWN SHARES IN AND I WANT TO HELP DECIDE WHAT ISSUES ARE IMPORTANT.? You don’t have to vote or get involved if you don’t want to, but the point is that under these new regulations you can if you want to.? Ain’t happening today that is for sure.

To begin we, the people, need to take control back.? Send this to everyone you know.? Let’s start a real grass roots effort to make the change we need.

Capitalism Redux!!

Power to the people!!

Oh, no picture today, I want you to focus on the words!!

Tags: Capitalism, capitalism redux, shareholder activism