The second technique — shareholder activism — has also picked
up steam in recent years. In this approach, concerned shareholders meet with
top managers and urge them to change the company’s ways. If the managers
resist, the shareholders file resolutions that, if approved at an annual
shareholder meeting, would change corporate policy. In 2003, over three hundred
resolutions were submitted on issues ranging from CEO compensation to labor
and environmental practices. None passed, because managers, through proxies,
control the great majority of shares, although in some cases the resultant
publicity did lead to changes.
A grander vision of shareholder activism involves the employee pension funds
that, collectively, own over half the shares of many U.S. companies. In this
vision, American workers, through their retirement funds, would require publicly
traded corporations to place workers, communities, and nature on a par with
short-term profit. In reality, pension funds have come to play a larger role
in capital markets, but ironically, it’s usually as the swing votes
when raiders seek to take over underperforming corporations. In these situations,
the pension funds often vote with raiders to enhance stockholder value.
Recently, pension funds have also pushed for improvements in corporate governance.
But pension fund trustees are hardly sans culottes in pinstripes. They’re
tightly bound by their fiduciary responsibility to retirees, and must seek
the highest rates of return or face reprisal from the U.S. Labor Department,
which oversees them.
It would be a luscious irony if capital markets could become a check on
runaway capitalism. But capital markets suffer from the same disease as corporations
themselves — an incurable devotion to maximizing profit. This isn’t
to say that efforts to improve corporate responsibility are a waste of time;
such efforts raise consciousness and are incrementally helpful. And they’re
certainly a form of right livelihood. But do they carry within them a systemic
solution to the defects of capitalism? This I deeply doubt. ... read
the whole chapter