April 13, 2013
Corporate governance structures in the United States make the old Soviet Union look like a model of democracy. As it is, the voting structure is so rigged to favor insiders that it is almost impossible for shareholders to remove even the most incompetent directors and install better management.
This is mostly done through the structure of elections to give incumbents an almost unbeatable advantage. However the NYT tells us that even in the rare cases where the incumbents are voted out they don’t always leave. Columnist James Stewart identified 41 cases where directors lost elections but still continued to hold their seats on the board.
This is why we need Director Watch (TM). The basic story in corporate America is that the CEO and other top management pay off the directors to look the other way as they pilfer the company at the shareholders’ expense. And then the CEOs run around claiming that they earned their big paychecks. Leonid Brezhnev would have been jealous.
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