Inverted Corporate Capitalism – Blocking Their Owner-Shareholders
By Ralph Nader
May 26, 2023
It is the season of annual shareholder meetings for giant corporations when CEOs go through the motions of elections for their Board of Directors and approval of other resolutions. People who own stock in General Motors (GM) receive the “GM Meeting Information” in an envelope emblazoned with this disingenuous message: “Your Voice/Your Vote/Be Heard. Every Vote Matters.”
When you look inside, you learn that this virtual meeting is on June 20, 2023, “live via Webcast.” No more in-person shareholder meetings, where at least for a couple of hours a year, the GM CEO, officers and the Board of Directors would have to hear out their powerless owner-shareholders’ recommendations or complaints. The media reports of these gatherings would sometimes highlight shareholder demands.
Not surprisingly, GM wants its shareholders to vote on management’s proposed “full agenda,” for this globally omnipresent giant auto company – with its factories, offices and other installations radiating impact in many directions that affect economics, politics, the environment and lives of workers, taxpayers and consumers.
The agenda reveals the anemic state of individual and institutional shareholders, long disempowered by the corporate toady – Securities and Exchange Commission (SEC). GM management only presents seven proposals for a vote. The first is to re-elect its 13-member Board of Directors, starting with Chair and CEO Mary T. Barra. The second is to ratify the election of Ernst & Young LLP as the company’s accounting firm. The third is to vote on the “advisory approval of Named Executive Officer Compensation,” and the fourth is to approve the company’s “long-term incentive plan.”
The GM Board of Directors urged an affirmative vote for these four proposals but they declined to do so for proposals 5, 6 and 7, that came from the owners-shareholders, which means GM, the company, is opposed.
Proposal 5 requested a report on GM’s operations in China; Proposal 6 asked for Shareholders’ Written Consent on some matters; Proposal 7 dealt with “sustainable materials procurement targets.”
Shockingly, proposals 5, 6, and 7 were too much for the imperial hired bosses of GM, who gave not a single nod to their shareholders’ requests. And not a single worry that next year would bring heightened indignation by large institutional shareholders (e.g., Fidelity, Vanguard, etc.) or individual owners. Proposals before the SEC to give shareholders more voice on more matters (e.g., campaign contributions) remain bottled up for years by corporate lawyers and the mostly indentured SEC Commissioners.
Imagine, after explicitly promising not to make any campaign donations to members of Congress who voted to overturn the 2020 election results, GM broke its promise in 2022 and sent hefty checks to 12 of the GOP seditionists and the National Republican Campaign Committee. MoveOn released an excoriating TV ad on GM’s broken promise. But no proposal cleared the barriers to demand an apology and other corrective actions for GM’s betrayal of the public trust.
It’s not just GM, of course. When Apple held its virtual meeting on March 10, 2023, the Board of Directors recommended a “Yes” vote to 1) re-elect members of the Board, including Al Gore, 2) “Yes” to ratifying Ernst & Young as its accountant, and 3) “Yes” to an “advisory vote to approve executive compensation.” However, Apple’s management responded with silence, meaning thumbs down, to shareholder proposals on “civil rights,” one on a China audit, another on communication with shareholder proponents, and lastly, one on “racial and gender pay gaps.”
The giant New England utility company Eversource Energy held its May 3, 2023 shareholder meeting in person, but at the corporate law firm of Ropes & Gray LLP. This is not exactly a space for hundreds of the company’s owners to turn out. No matter, all the proposals on the agenda once again were the company’s proposals dealing mostly with executive compensation. There were zero agenda items dealing with the company’s “blackouts,” disinvestment in skilled emergency staff, buying up public drinking water systems, climate issues, or its customers’ formidable difficulties registering complaints about a rate formula that no longer charges consumers for what they use, but rather bills customers using an arcane, more expensive formula.
So, the long slide for shareholder-driven corporate accountability continues. Yet the long upsurge in overwhelming corporate power also continues unabated – controlling federal and state regulators, blocking or dragging out court challenges for purposes of tactical attrition, pouring money into the campaign coffers of elected lawmakers and judges, and “handling” the large mutual and pension funds. (These large funds are similarly structured top-down with heavy payments to the bosses.)
Some nonprofits and religious orders still make a valiant try each spring with a few companies focusing on climate violence policies or the insatiable demands by manufacturers of large weapons of mass destruction. But the immunized, pampered, super-rich CEOs lose little sleep over such challenges.
Some large institutional shareholders like Blackrock, through its CEO Larry Fink, orate that companies should address the conditions of communities’ suppliers, workers, consumers and other affected “stakeholder” groups. But saying is not doing. And with about $8 trillion in invested assets, Blackrock could do a lot.
Shareholder and advocacy groups’ nudging sometimes brings forth voluntary moves, such as Starbucks eliminating plastic straws globally in 2020. Overall, the efforts of shareholder activities paint a dismal picture of historically high corporate supremacy over our political economy and its culture. All the while the algorithms grip and the chatbots loom.
Since corporations are all chartered into existence by state governments, it is time to dust off a more than hundred-year-old federal chartering proposal espoused by Presidents William Howard Taft, Theodore Roosevelt and Woodrow Wilson. Federal chartering might delineate better the terms of corporations’ existence and operations. That was the way they and others during the Progressive Era, wanted to rewrite the contract between giant companies and the government.
In 2018, Senator Elizabeth Warren (D-MA) proposed federal chartering by introducing the Accountable Capitalism Act, which is needed now more than ever in this globalized economy. She has yet to re-introduce the bill, seek co-signers and hold public hearings on this proposal which have been long-sought by civic advocates.
Existing state-based corporate chartering laws (mostly shaped by the race-to-the-bottom states of Delaware and Nevada) are ludicrously obsolete, hailing from the days of the quill pen.
For several years, we’ve been inviting Senators Elizabeth Warren and Bernie Sanders on our radio show/podcast (https://www.ralphnaderradiohour.com/) to discuss the big picture questions of giant corporatism. They have yet to accept.
Do you wonder why the progressive forces have so little influence over their forlorn allies in the Congress? Wonder no more. See our new report The Incommunicados (https://incommunicadoswatch.org/) for some compelling evidence.