5 ms·

They convince themselves that with their market power, they'll be able to absorb the cost of any settlement... which has been the case for a while now

Nevermark 3y ago
Today, corporate leaders are fundamentally, and therefore rationally, aligned toward optimizing short term results. Their personal risk is short term profit shortfalls, while shareholders and the corporation as a whole carry the longer term risks. Even more misaligned, is the case of public companies. The shorter term someone holds shares, the more impact they have (buying & selling) on current share price, while demanding shorter term results. Without actual personal accountability from company leaders, criminal & civil, no amount of long term corporate risk, will change their rational response to incentives. There is a good reason that dynamic companies “over compensate” their leaders with eye watering stock grants. It isn’t well earned compensation. It is a tool to align interests, benefitting everyone. But for slower growing companies, that is too costly. So for all companies, liability protection for shareholders should be matched by liability acceptance not just from the corporation as a whole, but when it comes to malfeasance, individuals responsible for the malfeasance.
- gruez 3y ago
  >but when it comes to malfeasance, individuals responsible for the malfeasance. How would that work? Individuals actors within corporations are already responsible for malfeasance. If you took it upon yourself to commit some crimes to boost your KPIs so you get a bigger bonus (eg. threatening employees with violence), being in a corporation isn't going to protect you. Even if you're the boss and you're telling your direct reports to commit crimes, that's still a crime.
  - Nevermark 3y ago
    Malfeasance in the regulatory violations and culpability for irresponsibility sense. Not just criminal. If the corporation is found culpable, or pleads no contest to culpability to reduce their fines or other repercussions, then executive, management or individual culpability would be determined (if any) by an outside party chosen by the board, acting in the interest of shareholders. Details, are not the point I am making, but that is one model. Whatever the process, it would be set in the corporate bylaws, and a minimum process required by stock exchanges to maintain listing. And possibly by law regarding corporate requirements - given law is what defines the balance of shareholder liability vs. corporate liability. This would add corporate employee liability to that balance.
    - gruez 3y ago
      >then executive, management or individual culpability would be determined (if any) by an outside party chosen by the board, acting in the interest of shareholders. What makes you think that "the big fish" will end up being punished, rather than the low level employees?
      - Nevermark 3y ago
        The devil is always in the details. I can see this improving things simply because the possibility/process of accountability is likely to result in more responsible behavior from everyone. But I can see your point too.

Nevermark 3y ago

Today, corporate leaders are fundamentally, and therefore rationally, aligned toward optimizing short term results. Their personal risk is short term profit shortfalls, while shareholders and the corporation as a whole carry the longer term risks. Even more misaligned, is the case of public companies. The shorter term someone holds shares, the more impact they have (buying & selling) on current share price, while demanding shorter term results. Without actual personal accountability from company leaders, criminal & civil, no amount of long term corporate risk, will change their rational response to incentives. There is a good reason that dynamic companies “over compensate” their leaders with eye watering stock grants. It isn’t well earned compensation. It is a tool to align interests, benefitting everyone. But for slower growing companies, that is too costly. So for all companies, liability protection for shareholders should be matched by liability acceptance not just from the corporation as a whole, but when it comes to malfeasance, individuals responsible for the malfeasance.

gruez 3y ago
>but when it comes to malfeasance, individuals responsible for the malfeasance. How would that work? Individuals actors within corporations are already responsible for malfeasance. If you took it upon yourself to commit some crimes to boost your KPIs so you get a bigger bonus (eg. threatening employees with violence), being in a corporation isn't going to protect you. Even if you're the boss and you're telling your direct reports to commit crimes, that's still a crime.
- Nevermark 3y ago
  Malfeasance in the regulatory violations and culpability for irresponsibility sense. Not just criminal. If the corporation is found culpable, or pleads no contest to culpability to reduce their fines or other repercussions, then executive, management or individual culpability would be determined (if any) by an outside party chosen by the board, acting in the interest of shareholders. Details, are not the point I am making, but that is one model. Whatever the process, it would be set in the corporate bylaws, and a minimum process required by stock exchanges to maintain listing. And possibly by law regarding corporate requirements - given law is what defines the balance of shareholder liability vs. corporate liability. This would add corporate employee liability to that balance.
  - gruez 3y ago
    >then executive, management or individual culpability would be determined (if any) by an outside party chosen by the board, acting in the interest of shareholders. What makes you think that "the big fish" will end up being punished, rather than the low level employees?
    - Nevermark 3y ago
      The devil is always in the details. I can see this improving things simply because the possibility/process of accountability is likely to result in more responsible behavior from everyone. But I can see your point too.