Harness Corporate Power
The most direct method to democratize corporate governance is to fix the problems created by the enormously flawed method of chartering multi-state and multi-national corporations. Currently, these corporations are chartered in individual states. Delaware has the distinction of charting the vast majority of these corporations.
The Problem with State Chartering: Individual states such as Delaware do not prioritize the protection of the public interest over the shareholder, has not moved to curb excessive managerial compensation or address lack of compliance with the law. Neither has it rolled back limited liability provisions for individual directors if they fail to take their responsibilities seriously.
The following is a quote from a Delaware Department of State Division of Corporations 2007 document. In its effort to attract clients, the state succinctly explains the problem with a state-based corporate charter system that generates a significant portion of its annual revenue from charting corporations:
"Of the corporations that make up the Fortune 500, more than one-half are incorporated in Delaware. It is no wonder that Delaware has become almost a brand name for the "business" of serving as the official home for corporations.
So what is the source of Delaware's prestige - even cachet? ... It includes the Delaware General Corporation Law which is one of the most advanced and flexible corporation statutes in the nation. ...It includes the Secretary of State's Office which thinks and acts more like one of the corporations it administers than a government bureaucracy.
There is the fact that Delaware is a small state whose populace is generally probusiness. The people of Delaware are aware that the income received from corporation franchise taxes is an important part of the state budget..."
Contrary to the Supreme Court decision extending personhood under the law to corporations, they are in fact merely manufactured structures of the state that are not explicitly mentioned in the constitution. Corporate goals are attained through the use of public means but paradoxically they are not required to benefit the public. Instead corporations are focused on the generation of capital (profit) as their primary goal and have subordinated all other aims producing a ruthless, growth-at-all-cost economy that has produced enormous ecological loss and pollution.
Corporations are ineffectively governed by our democratic process. As a result, they have seriously manipulated the system injecting their self-interest into the political arena creating rights for themselves equivalent to that of a human. Due to an unbridled passion for profit, they now represent the greatest threat to our democracy and well-being of our people and the environment.
The Solution - A Federal Charter: Governance for multi-state and multi-national corporations should reside with our federal government. We can design a federal charter for these corporations and:
create a legal obligation that they serve the public interest first and foremost as opposed to maximize shareholder profits.
require corporations to operate sustainably and ethically.
require participatory boards that include the involvement of workers, citizens from the affected communities, consumers and environmentalist.
roll back limited liability protections for directors for gross negligence
remove corporate money from political campaigns.
authorize a federal corporate charter revocation penalty for corporations that are repeatedly convicted of certain crimes.