Quote of the day: Enriching the lootocrats


From Ralph Nader, writing at his blog:

According to University of Massachusetts scholar, William Lazonick, in 2012 the 500 highest-paid executives received 52% of their remuneration from stock options and another 26% from stock awards.

Call it self-interest, or conflict of interest with their shareholder-owners, they continue to get away with this massive heist, this clever transfer of wealth. They do not need to get the approval of their owners – the stockholders – under what is called the “business judgement rule” (BJR). Developed by corporate attorneys and adopted with few boundaries by the Delaware courts – the state where corporate bosses go for pioneering leniency – the BJR strips the owners of corporations of meaningful control over the company executives and boards of directors other than to sell their stock, thereby leaving the rascals in charge.

Here is the definition of the BJR by the Delaware courts: “The business judgement rule…is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.”

How’s that for a legally entrenched entitlement during a growing decades-long corporate crime wave that largely goes unprosecuted by politically and budgetarily strapped enforcement agencies? A crime wave that in 2008 brought a criminally-speculative, self-enriching Wall Street down, draining trillions of dollars in pension fund and mutual fund assets – the very institutions that owned the most shares on the major stock exchanges!

Making matters worse, as Business Insider concludes, “all the evidence shows that – in recent years – they’ve [stock buybacks] not actually helped boost the stock values at all.” The bosses are eating the company’s seed corn. Indeed, before 1982 when the obeisant Securities and Exchange Commission (SEC) opened the floodgates for this executive rampage, buybacks were illegal. They were considered insider trading by the top company executives.

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