reply to post by dr_strangecraft
Actually, "Oil Thugs" do "come in front." They hold annual festivals with names like "shareholder meetings," where they explain what they have
done to improve the wealth of their employers, the shareholders. The people they answer to.
Long on theory short on reality. Once upon a time long, long ago, it was true that the shareholders elected wise experienced independent and honest
directors. Who in their turn, choose men of like character traits and of good report to be the leaders of their company. In small and medium size
businesses, directors were often successful small business men, bankers, sometimes lawyers and other respected professional people well known in the
Directors of such businesses considered their appointment as a director as equal to a soldier earning the Distinguish Service Cross in live ammo
combat. Directorships were more honorary than compensated as is the case today. The Board usually met quarterly for a half day, maybe got a free
lunch, and $20 to $50 to cover any travel expenses. That was then.
But alas, along came the Harvard School of Business and set that paradigm on its ear.
Somebody had discovered the proxy! A legal document where a shareholder authorizes another person to vote his shares at the next meeting
of shareholders. Proxy solicitations are mailed to each shareholder along with a recommendation of the current management how to vote. Like Ivory
Soap, 99.44% of the little shareholders do not know anything about the company but if it is “doing well” then they accept the current
management’s recommendations, check the appropriate blocks, sign the form, and put it into the mail. All done till next year!
Your 50 cents quarterly dividend continues. How were you to know it could have been $1.50 but for? But for the CEO collecting a humongous bonus!
Board of directors. In corporate eschatology it is the directors who are in charge of the company. They held the ultimate power over
their managerial appointees. It did not take long for ambitious managers to grasp if they had THEIR men on the Board, things could be a lot better for
them. Suddenly or by gradual means, the managers of many if not most American corporation took over their Boards. First, they raised the honorarium
from a token payment to a real useful sum of money.
High profile directors today are paid six figure and maybe seven figure salaries. Any objectivity they ever had, any felt obligation either moral or
legal to the shareholders long since went by the board - no pun intended. Former judges, senators, cabinet secretaries, presidents, and so on get more
money for a half days work than 10 people earn in a year! So are they going to challenge the CEO who put therm where they are?
Before the proxy was MISUSED so much that MISUSE is now considered normal usage, the company paid for the preparation and mailing both
ways of the proxy statement. It was considered a valid expense item to keep shareholders informed. A large corporation like GE may have 2-3 billion
shares of common stock. I’d guess more than 50% of shareholders hold 100 shares or fewer. Not even a drop in the ocean, but a droplet!
The total number of shareholders may be 500,000 or more. You can imagine if you had a grievance you wanted to present to the Board and the by-laws say
you need 5% of the shares to get on the speakers list, it could cost you $75,000 just for the mailing to 5%. You cannot count on ALL those you solicit
returning their proxy to you. As a practical matter, it is impossible for anyone to have an undeniable right to speak at the Meeting. No one in
management has to be ready to respond to valid criticisms. It is this effective lockout that gives rise to the hi-jinks you see at Meetings sometimes.
We learned a couple decades ago when the great CPA firms scandals hit the front pages that having the imprimatur of a famous and well
know CPA firm on the Annual Report does not mean ANYTHING but that they got the big bucks for doing what an bookkeeper does. Add and subtract numbers.
There is NO ONE looking over the shoulder of the CEO or his team. And now you can add the Board of Directors who have ACCESS to the corporate till.
Mountain lodges. Caribbean Oceanside villas. Use of corporate Lear jets. A weekend in Monte Carlo. And etc.
No Dr S/C, we are living in a far different world today than was true in the not too distant past. 2008 America is a SCAM country.
[edit on 4/22/2008 by donwhite]