Economy

Dan Perkins: Has American Corporate Leadership Gone Communist?

By Dan Perkins:

On Monday, August 19, the Business Roundtable announced they were changing the leadership direction in companies by abandoning the longstanding goal of American business, to create value for shareholders.

Instead of working for the people who have invested their money, expecting a return on their investments, the new direction states, "that businesses are responsible to all of their various ’stakeholders,’ including their workers, suppliers, and local communities.” I have some problems with this decision. First, let us understand that the CEO and all the officers of a public company report, and this is a crucial word, REPORT, to the board of directors. The board can and does hire and fire the CEO.

I wonder if all the major 200 boards have board resolutions that support this change? If a company is going to change direction, I believe that the shareholders should have a vote. If Ford is in the automobile business, the CEO cannot decide to close its plants and start making cement blocks. Should a CEO be able to do that without shareholder approval? My guess is that many of you are not aware of this change.

Thebalance.com web site and many others stipulate the role of the board of directors. It says, as to the purpose of a board of directors, "though they have many responsibilities, the primary responsibility of a corporate board of directors is to protect the shareholders' assets and ensure they receive a decent return on their investments. The board of directors owes its shareholders the highest financial duty under American law, known as a fiduciary duty."

These actions clearly indicate that the senior management of at least 200 major US corporations have decided they are going to be run under a communist objective. They have made the decision as to the direction of these companies, without the approval of its owners. If senior management wants to change the direction of a company, then give the owners, the shareholders, the right to vote on the change of direction.

I think we need to see the board resolutions for all of these companies, saying that the boards have approved the change in direction; any board that did not discuss with the owners the issue being decided should be fired, along with the senior management teams. These are the managers who did not attend to their fiduciary duties. If a management team is going to take its eyes off the ball of protecting shareholders, then how are we to judge its performance? Without numbers, how will investors make decisions on putting money to work in a company? Remember the leadership and the board are paid for by the owners of the company, the shareholders.

I believe this is an extension of the growing socialist/communist movement in the nation that is clearly wrong for America. It doesn’t matter if the home office is located in Washington DC or Detroit, Michigan. The shareholder knows what is best for a company but the shareholder has no say. To say that shareholders are no longer concerned or will not focus attention on businesses to try and provide the best shareholder return is absurd, and I think illegal.

These comments reflect the need to change senior management of these companies because the leaders have lost their direction and focus. I have been managing money for investors for almost 50 years. Part of my due diligence work in selecting investments for my clients is seeing whether the management team has its eye on the ball. In other words, namely making the company grows so the value of the stock will also grow and build wealth for my clients.

The 200 leaders of these major corporations have replaced shareholders with stakeholders. I ask you of these 200 companies, how many of the stakeholders are also shareholders? Pension funds, retirement accounts, charities, and foundations, etc. have relied on being shareholders, not stakeholders to meet obligations. Stakeholders have different agendas and may, in fact, be at odds with shareholders. When this difference happens in the boardroom, and it will, then who decides what to do? Do the shareholders have any input in the decisions?

Perkins Twist: I think the SEC has to step in and require a shareholder vote for a change in a company’s direction. Investors put their money in a company under one set of rules, and if the board and senior management want to change the rules, they should have to get permission from the owners. You see, under socialist control, you don't have a choice. The companies have decided that you, a shareholder, are not capable of making decisions because you are a "deplorable."

Dan Perkins is an author of seven books with four of them on Islamic terrorism against the United States. He writes current events commentary for over 20 different blogs including, Clash Daily, Newsmax, The Hill, the Daily Caller, Reactionary Times, and the oldest blog on the web, Conservative Truth. He appears on over 1,400 radio and TV stations a month as both talk show host and guest commentator. In October, Dan will be hosting the first national radio show on Cannabis called “American Cannabis Conversation” on w420Radio.network. His website is danperkins.guru.

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