Monday, December 12, 2005
Executives Target Shareholders with Orwellian Intimidation Tactics
from - David Siorta
Americans have always guarded their privacy, and have always had a distrust of large institutions that may infringe on that privacy. But in recent years, we have witnessed Corporate America quietly try to chip away at that privacy, for all sorts of self-serving reasons. And using huge campaign contributions, Congress has either sat by and watched, or actually helped these efforts. Still, few efforts have been as brazen as that described in a little-noticed story in the Financial Times this week – an effort that goes from just the brazen, and into the Orwellian realm of Big Brother.
The Times reports that "U.S. companies, alarmed by the number of activist investors on the prowl, are hiring surveillance firms to find out who their shareholders are and which ones might cause trouble." Let's state it another way: company management is now going all out to indentify – and possibly target – the owners of the company themselves (aka. the stockholders) if they are expected to "cause trouble."
The move, in some ways, looks like a modern-day (though at this point less harsh) version of the famous Pinkertons, only now that Big Business has been so successful in crushing unions, the surveillance is now being directed at shareholders. And just remember what Corporate America really means my "activists" causing "trouble." Big Business doesn't mean stockholders who are going to help executives pay themselves more, or stockholders who are going to demand wage cuts for ordinary employees. It more likely means the opposite – shareholders (or shareholding institutions) that are going to demand changes that management doesn't like.
For instance, remember a guy named Sean Harrigan? While he was the head of the California Public Employees Retirement System (CalPERS), the fund used its considerable stock holdings to sponsor stockholder resolutions cracking down on CEO pay and perks; forcing drug companies to lower their prices; and protecting worker benefits from corporate rip-off schemes. For his trouble, Harrigan was bullied out of his job by Gov. Arnold Schwarzenegger (R-CA) and replaced by a corporate executive – a move clearly done at the bidding of Schwarzenegger's Big Money donors.
There are plenty of other institutions and individuals – big and small – that Corporate America is likely putting under "surveillance" in order to bully or intimidate. Over the last number of years as Congress has pushed policies like tort reform and deregulation, shareholder resolutions/activism has been more frequently used as a way to force Big Business to change.
The problem, of course, is that along with Corporate America's new shareholder surveillance/targeting project, Congress has already passed laws limiting shareholder power. Most high-profile of these was the Private Securities Litigation Act, sponsored (if you can believe it) by now-S.E.C. Chairman Chris Cox, when he was a House member. This was a bill that made it much harder for shareholders to use the judicial system to stop company management from ripping them off. As one market analyst noted, Cox's bill "paved the way for corporate chieftains basically to lie without fear of being sued" by shareholders who own the company.
Ultimately, what all of this about is subverting the few shreds of democratic control the general population has over Big Business. Though corporations are, technically, publicly chartered (meaning under the direct control of the public), our bought-off government has done everything it can to insulate Corporate America from public oversight, whether through limiting citizens' legal rights in court against corporations, gutting workplace/wage/environmental laws, and preventing shareholders (aka. companies' owners) from excercising their rights over their property. The result is that corporations are both portrayed and treated as institutions with rights that supercede rights granted to the ordinary citizen. And Big Business takes advantage of that in all sorts of ways, whether through illegal union busting campaigns that go unregulated by a lax Labor Department, or now shady surveillance/intimidation tactics over shareholders.
The question, then, is simple: what will it take for the public to finally say enough is enough? We live in an age of free-market fundamentalism, where every message we get from politicians or the media Establishment is designed to reinforce the assumption that Big Business is all-powerful, on par with uncontrollable forces of Nature. But in reality, if we continue to treat corporations as above any laws whatsoever, we will see more Enrons bilk shareholders, more Wal-Marts rip off workers and destroy communities, and the overall destruction of America's middle class.
Is that really the inevitable future of this country? As an eternal optimist, I'd like to think not. But that means we must work to make these huge issues of corporate power central to America's political debate. We must reject politicians whose only goals are to use the political process to enrich themselves and increase their own power, and we must reward those leaders who stand up to Big Money interests, and who, in the tradition of Teddy Roosevelt, seek to use government as a force that protects the interests of ordinary citizens against the sharpest edges of capitalism.
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from - David Siorta
Americans have always guarded their privacy, and have always had a distrust of large institutions that may infringe on that privacy. But in recent years, we have witnessed Corporate America quietly try to chip away at that privacy, for all sorts of self-serving reasons. And using huge campaign contributions, Congress has either sat by and watched, or actually helped these efforts. Still, few efforts have been as brazen as that described in a little-noticed story in the Financial Times this week – an effort that goes from just the brazen, and into the Orwellian realm of Big Brother.
The Times reports that "U.S. companies, alarmed by the number of activist investors on the prowl, are hiring surveillance firms to find out who their shareholders are and which ones might cause trouble." Let's state it another way: company management is now going all out to indentify – and possibly target – the owners of the company themselves (aka. the stockholders) if they are expected to "cause trouble."
The move, in some ways, looks like a modern-day (though at this point less harsh) version of the famous Pinkertons, only now that Big Business has been so successful in crushing unions, the surveillance is now being directed at shareholders. And just remember what Corporate America really means my "activists" causing "trouble." Big Business doesn't mean stockholders who are going to help executives pay themselves more, or stockholders who are going to demand wage cuts for ordinary employees. It more likely means the opposite – shareholders (or shareholding institutions) that are going to demand changes that management doesn't like.
For instance, remember a guy named Sean Harrigan? While he was the head of the California Public Employees Retirement System (CalPERS), the fund used its considerable stock holdings to sponsor stockholder resolutions cracking down on CEO pay and perks; forcing drug companies to lower their prices; and protecting worker benefits from corporate rip-off schemes. For his trouble, Harrigan was bullied out of his job by Gov. Arnold Schwarzenegger (R-CA) and replaced by a corporate executive – a move clearly done at the bidding of Schwarzenegger's Big Money donors.
There are plenty of other institutions and individuals – big and small – that Corporate America is likely putting under "surveillance" in order to bully or intimidate. Over the last number of years as Congress has pushed policies like tort reform and deregulation, shareholder resolutions/activism has been more frequently used as a way to force Big Business to change.
The problem, of course, is that along with Corporate America's new shareholder surveillance/targeting project, Congress has already passed laws limiting shareholder power. Most high-profile of these was the Private Securities Litigation Act, sponsored (if you can believe it) by now-S.E.C. Chairman Chris Cox, when he was a House member. This was a bill that made it much harder for shareholders to use the judicial system to stop company management from ripping them off. As one market analyst noted, Cox's bill "paved the way for corporate chieftains basically to lie without fear of being sued" by shareholders who own the company.
Ultimately, what all of this about is subverting the few shreds of democratic control the general population has over Big Business. Though corporations are, technically, publicly chartered (meaning under the direct control of the public), our bought-off government has done everything it can to insulate Corporate America from public oversight, whether through limiting citizens' legal rights in court against corporations, gutting workplace/wage/environmental laws, and preventing shareholders (aka. companies' owners) from excercising their rights over their property. The result is that corporations are both portrayed and treated as institutions with rights that supercede rights granted to the ordinary citizen. And Big Business takes advantage of that in all sorts of ways, whether through illegal union busting campaigns that go unregulated by a lax Labor Department, or now shady surveillance/intimidation tactics over shareholders.
The question, then, is simple: what will it take for the public to finally say enough is enough? We live in an age of free-market fundamentalism, where every message we get from politicians or the media Establishment is designed to reinforce the assumption that Big Business is all-powerful, on par with uncontrollable forces of Nature. But in reality, if we continue to treat corporations as above any laws whatsoever, we will see more Enrons bilk shareholders, more Wal-Marts rip off workers and destroy communities, and the overall destruction of America's middle class.
Is that really the inevitable future of this country? As an eternal optimist, I'd like to think not. But that means we must work to make these huge issues of corporate power central to America's political debate. We must reject politicians whose only goals are to use the political process to enrich themselves and increase their own power, and we must reward those leaders who stand up to Big Money interests, and who, in the tradition of Teddy Roosevelt, seek to use government as a force that protects the interests of ordinary citizens against the sharpest edges of capitalism.
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