Quote:
Originally Posted by TheMercenary
That would be good? You want the government to control the private market?
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It should not be necessary. But something changed. Boards of Directors no longer represent the interest of stockholders. That is their job. But many companies have subverted their Boards for the benefit of management and at the expense of all others.
For example, a CEO (president) should never be Chairman of the Board. Chairman represents stockholders. His job is to keep the CEO in line. In troubled company after company, the CEO is also the Chairman.
For example, Robert Allen of AT&T perverted the Chairman's function. Fiorina of HP also had too much power. Same with Akers of IBM.
Stunning is how much information was denied outside Board members in GM. For example, much financial information available to insider board members was withheld from outside Board members. Outside Board member were limited to how long they could study the financials - ie 45 minutes.
Executives should answer to the Board - not be the Board. Having perverted the function, executive compensation has skyrocketed at the expense of employees and stockholders.
One stunning example was AT&T. The CFO quietly whispered to Sandy Weil (an outside Board member) that AT&T could not meet its short term debt payments. That is about the most chilling fact in any board room. However AT&T was literally on the verge of complete meltdown before any outside Board members realized that AT&T was only months from complete disintegration. That also would never happen if executives truly answered to the Board.
AT&T continued to disintegrate while richly rewarding executives. Therefore all that was left was a mobile phone operation using obsolete frequency division multiplexing and the name. AT&T's remains were purchased only for the name - while its Board remained completely ignorant of the destruction.
Today, the Chairman too often is the CEO. #1 symptom for trouble. Nobody represents the stockholders. Executives simply reward each other.