Should Shareholders Vote With Their Feet?

Loren Steffy says that has no effect. And as usual, he’s right. The current system of corporate governance effectively cuts the actual owners of a corporation out of any influence over who runs their corporation as well as all other decision.

Corporations are creatures of the law. They are statutory creations. If we as citizens of  the United States as well as being citizens of individual states (that do the chartering of corporations) want to change the rules, we can. But there has to be some political will.

Let me lay out for you this utterly radical thought. I believe that –

THE PEOPLE WHO OWN THE CORPORATIONS SHOULD HAVE SAY IN HOW THEY ARE MANAGED.

What do you think? Does that make me a communist? I think I am a purer capitalist than many in the business world because I actually believe in private property in a way they can’t wrap their minds around. If you own part of a company, why should your wishes be ignored because of the way the law and the organization are structured?

Shareholders should be primary factors in determining who runs the company and how the company is managed.

Selections of the CEO and the Board of Directors should require shareholder ratification. Executive compensation packages should require ratification by the shareholders. Shareholder meetings should be conducted electronically on a regular basis far more often than the once a year mandated now.

It’s one thing to talk about free market capitalism and then not do it. That’s wretched hypocrisy. Let’s talk about it capitalism sincerely and act on our beliefs. To make capitalism a reality in the corporate board rooms of the United States we would have to make a connection between ownership and power. Why should CEO’s appointed without shareholder input and acting in opposition to shareholder wishes, be able to make their own policy, and choose their own boards. They are essentially acting as if the corporation was their personal plaything and not a duty to the real owners.

We can do better.

James Pilant