29 Oct 2021 Senate Bill Lets Shareholders Sue C-Suite for Social Justice Agenda
As fall brings a chill to the air, legislation has been proposed on Capitol Hill to also cool down the red-hot radicalism that’s being pushed by woke corporate leaders.
In a commentary published at Townhall, Free Enterprise Project Director Scott Shepard highlights the “Mind Your Own Business Act,” a new bill from Senator Marco Rubio that works “in conjunction with state corporation law” that “marks the first shot by conservatives in the incipient legislative war against woke corporate executives bent on using other people’s investments to instantiate themselves as unelected, unappointed policy czars.”
Scott expresses his exasperation with how corporate America is being used by the left to promote all matters of the left’s agenda:
You have no idea how many CEOs I’d like to sue either to force them to show how opposing voter ID was good for their companies’ bottom lines, or to pay me damages. Well, no – maybe you do have a pretty good idea. And maybe you’d like to join me. Which goes far to illustrate why this legislation is so powerful on its own terms.
Rubio’s bill, as Scott describes it, offers relief by putting the burden on CEOs to explain how their politicking helps meet business goals and return on investment:
Under the Act’s provisions, shareholders would be able to take CEOs and directors to court when they use company funds or put company reputation on the line to take political or social stances that are only tangentially related to the genuine business activities of the companies. Upon a showing that CEOs have mounted their soapboxes, the CEOs would be required to demonstrate that objective, competent research has shown the value of that move to the company. Failure to make this demonstration would make CEOs liable for self-dealing – for putting their personal interests ahead of their duties to the company – and would make them personally liable for damages.
Putting corporate executives’ skin in the game would be a powerful means for bringing the business community back to neutral.
“Whatever their pretentions, they are employees of the shareholders, nothing more,” Scott remarks. “When they behave differently, they must go.”
Would that it needn’t be said at all, but these days it cannot be said too often: CEOs do not own “their” companies, either singly or along with their boards of directors. They are collectively the managers of the companies for the real owners, the shareholders.
Remembering this puts the novel spectacle of “woke” CEOs spouting their personal policy preferences as company policy, and obnoxiously declaring that the “purpose of the corporation” is stakeholder capitalism, in its proper light. These are firing offenses.
But this bill is actually just the tip of the reform iceberg. More needs to be done, Scott notes:
Reforms to the U.S. Securities & Exchange Commission are necessary to keep it from forcing further politicization and new-style discrimination upon corporations. The proxy-advisory companies must be subjected to conflict-of-interest and transparency discipline. Shareholder proxy voting should be significantly reformed. None of this legislation will require new bureaucracies, or increase regulatory burdens. It will simply stop people and organizations from stealing the power of other people’s capital investments in order to push their own narrow, personal policy preferences.
Click here to read all of Scott’s commentary – “New Rubio Bill First Volley in War Against Lawless Corporate Executives” – at Townhall.