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Monday, February 14, 2005

Democracy and corporate governance

An article in the business section of the Times on Sunday profiled Emil Rossi, a California hardware store owner and corporate investor who for some thirty years has been agitating for greater "democracy" in corporations. He reminds me of Lewis Gilbert, "America's corporate conscience" (according to a media account), who was active from the 1930s through the 1950s (maybe longer--I'm working from memory here; for details, check the intro to my book when it finally appears).

What is striking to me as a historian is how severely limited the concept of democracy in corporate governance has been in the twentieth century. Here it means "[t]he notion that the majority of shareholders should rule," which, despite the Bush administration's pursuit of it in the Middle East, the author tells us, "is still treated as a quaint one, at best, in most American boardrooms." But "the majority of shareholders" doesn't mean majority in numbers of individuals, which is how one normally thinks of democracy, but majority of shares. Still, making shareholder resolutions binding on boards of directors would constitute a big step in restoring control by the owners of the corporation--and in that limited sense restoring democracy.
Patrick McGeehan, "The Agenda: No Democracy on These Ballots," New York Times, 2/13/o5, 3:4.

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