When a public company's actions affect many innocent people due to their personal greed, what can be done to remedy their actions?
This is an actual situation that occurred with a public company in the United States in the late 1990s….one that I’ve debated with people for many years. Its interesting to hear people’s ideas of how things like this are remedied, if they even can be. Love to hear the Fluther communities philosophies…..
“How are things like this fixed: A majority shareholder and his company’s board of directors layoff employees 2 months before Christmas that save the company around $1.5 million, and allows the company’s earnings to meet analysts’ projections. A little while after the company has released its earnings and its stock is strong and healthy due to meeting analysts’ projections, the positions that were eliminated that saved $1.5 million are filled again with new employees, and the majority shareholder and a few board members cash out over $60 million and walk away from the company. How do you feel issues like this can be remedied? (i.e., government intervention? market self-governance? karma?)?”
Observing members:
0
Composing members:
0
5 Answers
Hold individuals accountable for corporate misdeeds.
Watch Erin Brockovich and see how she does it.
There’s nothing illegal about their actions (as described). Some people even think that this, as an example of a “free” market at work, is a good and virtuous thing that saved the company a bundle and enabled the owners to get rich – after all, that’s what companies are for. They are there to make money – they are not necessarily there to help people, except in as much as it is profitable to help people. In other words, it’s crappy to be crappy, but it’s not illegal to be that flavor of crappy.
CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility. From The Devil’s Dictionary.
Now, what can you do individually about it, if you want to enforce your standards of non-crappiness? Not a lot. But if you become a shareholder, you at least have a vote. You could organize other shareholders and hope they vote your way, too. You could ask your Congresscritter to vote for more regulation of that industry if you feel like that’s the right thing to do. You can organize a boycott of their product or service, too. These solutions are more effective, the more people you can get to stand in solidarity with you.
But mostly? You need to find a way to make being crappy far less profitable. If it loses them money, they will stop – because they exist to make money. That’s pretty much the only way they will listen to you.
I believe there are some proposed laws that will force principles and leaders of corporations to take a much longer term of view. I.e., they won’t be able to exercise stock options for three years or more. Thus, if the stock falls below the option price, the options will be worthless. It will make it harder for there to be a kind of legally sanctioned version of “pump and dump.”
I think this would be a good idea. I’m sure there is a way to game it, but we’ll fix that when we figure it out.
Similarly, gifts of stock would have to be held for a certain period of time before they could be sold. If the stock went down, then the officer would have a smaller payday (although they would still make money). Perhaps we could have a law that would make it illegal to have more than half one’s stock compensation be in the form out outright gifts.
I think this would be a good idea. I’m sure there is a way to game it, but we’ll fix that when we figure it out.
Answer this question 
Composing members:
0
