THE BOSSES GET RICHER, THE REST GET POORER…
0800 by Jeff HessRalph Nader, writes in Vanishing the People’s Wealth to Make the Bosses Richer:
Imagine you are a shareholder in a big company and the top executives are sitting on huge amounts of cash and are not interested in putting it to work through productive capital investments, research and development, reducing company debt or paying employees a higher wage. What would you want done about it? Since you and other shareholders are the owners of the company, you’d likely say “give us back our money in cash dividends.”
“No way,” say your hired hands, the company managers, who have spent a staggering $2.1 trillion of your money in the last five years on stock buybacks allegedly to increase the company’s earnings per share ratio, instead of increasing shareholder dividends. Overall this tactic has not been working over time except to make the corporate bosses richer, which is the real reason for many buybacks.
What is the incentive for this cash burning frenzy? According to University of Massachusetts scholar, William Lazonick, in 2012 the 500 highest-paid executives received 52% of their remuneration from stock options and another 26% from stock awards.
Call it self-interest, or conflict of interest with their shareholder-owners, they continue to get away with this massive heist, this clever transfer of wealth. They do not need to get the approval of their owners—the stockholders—under what is called the “business judgement rule.”. Developed by corporate attorneys and adopted with few boundaries by the Delaware courts—the state where corporate bosses go for pioneering leniency—the BJR strips the owners of corporations of meaningful control over the company executives and boards of directors other than to sell their stock, thereby leaving the rascals in charge.
Here is the definition of the BJR by the Delaware courts: “The business judgement rule…is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.”
How’s that for a legally entrenched entitlement during a growing decades-long corporate crime wave that largely goes unprosecuted by politically and budgetarily strapped enforcement agencies? A crime wave that in 2008 brought a criminally-speculative, self-enriching Wall Street down, draining trillions of Continue Reading »












