Even Their Owners, the Shareholders, Need Protection Against the Overreach of Corporations - and Republicans

From the introductory paragraph of  "The Growth of Executive Pay", by Lucian Bebchuk, Harvard Law School and Nber Yaniv Grinstein, Cornell University, Johnson School of Management:

"This paper examine both empirically and theoretically the growth of US executive pay during the period 1993-2003.  During this period, pay has grown much beyond the increase that could be explained by changes in firm size, performance, and industry classification.  Had the relationship of compensation to size, performance and industry classification remained the same in 2003 as it was in 1993, mean compensation in 2003 would have been only about half of its actual size."

Not only has this compensation for top executives NOT reflected merit, as a measure of performance, it coincides with these executives using their corporations to reflect their own political views and preferences.  What is not mentioned in this quote is that it is in particular not representative or correlative with the return to investors and shareholders, who have had a decreasing control as effective partial owners over the executives and over that compensation - or the hijacking of these companies for individual exploitation.

Since 2003 was a while back, lets look at the most recent numbers following the growth of executive compensation:

According to the Federal Reserve, U.S. corporations held a record $1.93 trillion in cash on their balance sheets in 2010. But they are not investing to expand their companies, grow the real economy or create good middle-class jobs. Corporate CEOs are literally hoarding their company’s cash—except when it comes to their own paychecks. (my emphasis added - DG)

In 2010, Standard & Poor's 500 Index company CEOs received, on average, $11.4 million in total compensation— a 23 percent increase in one year.[1] Based on 299 companies’ most recent pay data for 2010, their combined total CEO pay of $3.4 billion could support 102,325 median workers’ jobs.[2]
1 AFL-CIO analysis of 299 companies in the S&P 500 Index. CEO pay data provided by Salary.com.
2 U.S. Bureau of Labor Statistics, May 2009 Occupational Employment and Wage Estimates, national cross-industry estimate of median annual compensation for all occupations.

Any chance, do you think, that might have a political angle to it? Ya think?  Given that - just for an example

-"Fortunately, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act contains new tools to help limit runaway CEO pay. Shareholders now have a “say-on-pay” vote on executive compensation, and companies must disclose the ratio of CEO-to-worker pay at each company."

That was legislation about giving power to real people, to share holders, to owners and investors, and taking unlimited power to give themselves huge undeserved pay and bonuses away from the top execs.

In the context of corporate donations and the Supreme Court decision in Citizens United, and the recent Governor's race in Minnesota, we can see that corporations no longer even pretend to give a tinker's damn about the wishes of either their customers, or their shareholders.  This applies to investors whether they are individuals or institutional investors.

This should concern all of us, because it has a significant impact on the role of the individual human voter, real life human being citizens, as we participate in our government.  Increasingly, it is NOT OUR government.  It is the government bought and paid for by corporations and the few individuals who take power at the top without accountability.

There was a time, in the 'good old days', when shareholders were in charge; when they had far more control of the companies in which they invested, becoming partial owners.  Not for some time has that been the case in most instances.

Because Shareholders NEED advocacy groups, because their control, their interests are no longer served by boards of directors and executives that interlock in the ultimate good-old-(mostly)boys clubs giving themselves over sized salaries. Salaries they award themselves and each other, even when their performance is less than stellar, or actively damaging to their interests and the company.

From the May 14th 2011 STrib:

Spurred by a U.S. Supreme Court ruling that opened corporate coffers to political candidates, shareholder advocacy groups are taking companies here and elsewhere to task for their political spending policies.

In Minnesota, the movement also is being fueled by several companies' six-figure donations to MN Forward, an organization that backed Republican Tom Emmer, whose anti-gay stance became a hot issue in the governor's race.

More than 80 shareholder resolutions seeking changes in political spending policies have been filed this year by a collection of socially responsible investment funds, unions and public pension funds, according to the Sustainable Investments Institute, a proxy research organization based in Washington, D.C. The Center for Public Accountability, a nonpartisan organization that's been around since 2003, is coordinating their efforts.Even more were planned but some changing policies caused groups to withdraw them. That's what happened at both Target Corp. and Best Buy.

Best Buy, which contributed $100,000 to MN Forward, had a resolution from Trillium Asset Management withdrawn after agreeing to changes. The Richfield-based retailer has a political contributions steering committee of five senior executives that meets quarterly, or as needed, to review and approve corporate funding on contributions over $5,000.The committee considers the business impact, including the interests of the company, employees, shareholders and customers; public policy goals, and alignment with Best Buy's "core values" when deciding where to allocate funds, according to the company's policy.

Target Corp. also had a resolution withdrawn from Boston-based Walden Asset Management after announcing a group of senior executives would vet donations. The company had donated $150,000 to MN Forward and caught most of the heat of the controversy -- including a store boycott.
A proposal at Maplewood-based 3M Co., though, made it to a vote this past week. At the company's annual meeting Tuesday shareholders defeated a resolution seeking more visibility on corporate political spending. But the proposal, sponsored by Walden and Trillium, received nearly 32 percent of the vote.
That's roughly the same percentage as votes this year on similar measures presented by firms like Walden and Trillium at five other companies, including AT&T, PepsiCo and Citigroup.

"We believe a vote over 30 percent sends a strong message to the 3M board and top management that they have some unfinished business as they review their political spending policies and procedures,"

said Timothy Smith, a senior vice president of Walden.
3M declined to comment on the results.
For 3M and other companies in Minnesota, the focus on corporate political donations got an added spark because of their contributions last year to MN Forward, a conservative political organization that supported Emmer.
Trillium also withdrew a resolution it had submitted to Golden Valley-based Pentair Inc. pending the outcome of talks between the company and the investment fund on changes to its political donation policies, according to the Sustainable Investments Institute.

The situation was different for 3M Co., which contributed $100,000 to MN Forward. Before the votes were tallied, representatives of Walden politely peppered 3M CEO George Buckley about its policies and its support for Emmer. Some speakers asked if the company had considered that its reputation for supporting diversity could suffer because of Emmer's anti-gay stance.
The demise of the free lunch, gift bags, company store and displays of new products have reduced the turnout at 3M's annual meeting in recent years. Even so, the event still brought more than 400 shareholders to St. Paul's RiverCentre, a captive audience for supporters of the political spending proposal.
Buckley told the speakers 3M backed Emmer because of his pro-business policies and that the company does not consider candidates' positions on social issues when making contributions.
In an interview after the meeting Michael Dean, executive director of Common Cause Minnesota, rejected that argument.
"You can't draw a bright line to separate out a candidate's social positions from political positions," he said.
Dean, whose organization focuses on campaign finance reform, presented the proposal at the 3M meeting on behalf of Walden and Trillium. Other speakers supporting it included several students and faculty members from Macalester and Carlton colleges. Dean said they became involved with the shareholder advocacy movement through on-campus groups that monitor their college's endowment portfolios.
Dean said he was encouraged the proposal garnered more than 30 percent of the vote at 3M and recalls that these types of resolutions used to get less than 10 percent when they first began showing up on proxies several years ago.
"These are long-term objectives," Dean said.