{"id":45982,"date":"2023-08-24T15:21:52","date_gmt":"2023-08-24T19:21:52","guid":{"rendered":"https:\/\/nationalcenter.org\/?p=45982"},"modified":"2023-12-14T12:27:21","modified_gmt":"2023-12-14T17:27:21","slug":"stefan-padfield-break-up-overboarding-to-break-up-woke-capitalism","status":"publish","type":"post","link":"https:\/\/nationalcenter.org\/ncppr\/2023\/08\/24\/stefan-padfield-break-up-overboarding-to-break-up-woke-capitalism\/","title":{"rendered":"Stefan Padfield: Break Up Overboarding to Break Up Woke Capitalism"},"content":{"rendered":"

In light of the\u00a0July 12-14 hearings<\/a>\u00a0before the House Financial Services Committee examining the impact of environmental, social, and governance (ESG) factors on financial decision-making, there has been a lot of talk about ways to rein in what might loosely be called \u201cwoke capitalism.\u201d<\/p>\n

\"Stefan<\/a>

Stefan Padfield<\/p><\/div>\n

For example, The Wall Street Journal\u2019s editorial board\u00a0recommended<\/a>\u00a0that Congress should enact legislation that would categorize proxy adviser recommendations as \u201csolicitations\u201d subject to anti-fraud rules.<\/p>\n

One underappreciated aspect of woke capitalism is, as we have referred to it at the Free Enterprise Project, the \u201ccorporate incest problem that\u2019s plaguing the management of American business.\u201d That quote is from our recent\u00a0Netflix shareholder proposal<\/a>, wherein we sought adoption of a policy prohibiting Netflix directors from simultaneously sitting on other boards. Among other things, our rationale is that:<\/p>\n

While this corporate practice may seem innocently cooperative .., it creates a situation in which board members \u2026 have more allegiance to each other than they do to the companies they are supposed to serve. In other words, the sharing \u2026 of board members between corporations has given rise to an elitist managerial class that has sway over most large companies \u2026.<\/em><\/p><\/blockquote>\n

Essentially, we are arguing that it\u2019s problematic when the same people who are hobnobbing at Davos each year in order to plot how best to implement the\u00a0Great Reset<\/a>\u00a0are also hiring and nominating each other as the CEOs, executives, and directors of corporations they are supposedly duty-bound to maximize the independent value of.<\/p>\n

Perhaps worth noting here, this problem of overboarding is so ingrained that proxy adviser Glass Lewis defaults to only recommending against a non-executive director on that basis if they are \u201con\u00a0more than five public company boards<\/a>.\u201d<\/p>\n

In light of all this, the purpose of this column is to argue that even if we can\u2019t get corporations to commit to limiting their directors to hold just one board seat, we can do a better job of alerting shareholders and society generally to the problems of overboarding.<\/p>\n

To start, let\u2019s do some back-of-the-envelope calculations based on the following inputs.<\/p>\n