4 ms·
The goal isn't for the company per se to care. The goal is for the leadership of the company to care, since such large fines hurt the profitability, may lead to
by jsmith45 4y ago
The goal isn't for the company per se to care. The goal is for the leadership of the company to care, since such large fines hurt the profitability, may lead to them forfeiting certain bonus compensation tied to maintaining certain profitability levels. It also can negatively impact the stock price, which means leaderships stock options are worth less, etc.
The idea being that once it becomes clear to the leadership that allowing such things to continue will hurt them personally, they will put a bunch of effort into making sure the company does not do whatever caused the enormous fines again in the future.
I don't think this is an especially efficient way of accomplishing this. Holding company leadership directly accountable, and having the courts deny the leadership some or all of their compensation, or in especially egregious cases, removing them from controlling the company entirely would be a more direct way of ensuring the companies make good faith efforts to comply with the law (or avoid torts, as the case may be). But we don't generally go that way.
- jrsj 4y agoBiggest problem I see with the current system is that it’s only a deterrent if the fines are large enough. If they are too small they have the opposite effect and actually encourage criminal behavior because the reward will be worth the risk statistically. On the other hand, defaulting to go after corporate leadership directly does create an opportunity for shareholders to mostly get away with things they supported behind the scenes. Very complicated issue overall and I haven’t really decided anything on it yet other than “we can probably do better”.
- Ekaros 4y agoMaybe it should be possible to fine the holders of stock directly. Not the company, but the stock and option holders.