SEC chairmen Clayton kept trying to reiterate that directors are only required to report the nature of director compensation to their investors, and that the SEC usually tries to avoid dictating to companies what they are allowed to pay their executives.
Chairman Clayton is right. America is a country that is based strongly upon the idea of individual liberty, and with cases like Wework, if you don’t like the investment, it is up to you to decide whether or not to invest, and not anybody else.
Corporations are just a collection of investors, and they have the power to hire and fire their executive officers. If they don’t like management, the solution to this problem is very simple: get rid of them. If you are unable to do this because a small group of insiders control all of the votes, the solution to this problem is also very simple: invest somewhere else. America has thousands of companies to choose from.
In addition, 10x voting shares are not a new concept, and nor is a golden parachute; these are corporate by-laws that have existed for a very long time, and there are many examples of companies with directors that have 10x voting shares. Facebook is one of the first that should come to mind, where Mark Zuckerberg controls 88% of the votes
CTRM’s Chairman allotted himself 12 billion votes. Yes, 12 billion, with a “B”
99% of the votes in Pinterest are concentrated among insiders. Most unicorns are structured like this.
The problem isn’t corporate governance, the problem is the egregious pumping, market manipulation, intentional misrepresentations, the fraud, and most importantly, the lack of any rule of law.
Today’s stock market is like the wild west, and we are currently in the midst of an economic and fiscal expansion never before seen in human history. Historians will probably look back at this time as a major turning point for humanity; one where trillion dollar tech corporations were the darlings of Wall Street, and AI and quantum computers were just beginning to leave their imprint on society.
People will probably find it unusual that savings and loans companies were merged with investment banks, and even more unusual that the directors of these banks sat on the board of the very mechanism providing the credit that precipitated their unimaginable profits. They will probably ask why it was legal for companies to spin themselves off into three publicly traded entities, then proceed to engage in inventive stock buyback schemes with one another as their valuations plummeted, making the insiders rich while their employees lost their jobs and their shareholders lost everything.
The problem isn’t corporate structure, the problem is that the regulators are completely captured by an unregulatable cartel of banking interests that have turned our capital markets into a casino; playing with the very essence of corporate America like it’s a toy as they watch from their towers in Manhattan while the greatest nation in human history slowly morphs into a shadow of its former self.