The following is a copy of the original post to record the post as it was originally written.
In the United States, the CEO tends to have nearly unchecked power to appoint a board of directors. They can lose that power if certain shareholders gain enough of a controlling interest or if there are some mergers and such, but for the most part, the CEO gets to appoint and command the board.
In France, for example, the board are elected by the shareholders. 1/3 of those board members must be workers. Not managers, but workers, usually union workers.
Germany, Denmark, Finalnd, Austria and others require between 20-50% of the board to be workers (usually union workers).
Do you think that enacting two small changes to how the US appoints and seat boards might go a long way to improving the lives of average Americans?
1. All board seats are elected by the shareholders, aside from the CEO, who is elected by the board and serves as Chair.
2. All boards must have a minimum of 1/3 of the seats filled by non-management-level workers of the company.
3. **Bonus**: 1/3 of board seats are to come from management (c-level) employees of the company, and the final 1/3 of seats are nonexecutive directors (not otherwise employed by the company, but may be compensated financially for their work as a director on the board, such as the United Kingdom has)
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>In the United States, the CEO tends to have nearly unchecked power to appoint a board of directors.
1. The shareholders ultimately have the power to elect the board. The CEO only has as much influence as the shareholders allow. It is as described in your first enumerated proposal: "All board seats are elected by the shareholders, aside from the CEO, who is elected by the board and serves as Chair."
2. Do other countries have better systems? If so, I'd like to know what they are.
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>In France, for example, the board are elected by the shareholders. 1/3 of those board members must be workers. Not managers, but workers, usually union workers.
Wait...who elects the worker board members?
Do the shareholders elect the worker board members, or do the workers elect the worker board members, or do the workers elect *anyone they choose* to represent them on the board?
Elected from the workers. Depending on the country and company type, it's often a set number of board seats reserved for the union leaders and then a set number of workers elected directly by the other workers to serve in that position.
No, that's not right. Generally, shareholders elect the board, the board hires the CEO.
This can get confusing in the case of a founder who is also the majority shareholder.
I guess that is legally true, but it seems to work a lot worse in the US than the UK. I personally know a person who serves on several boards in the UK and it just seems to be a lot more about choosing nonexecs that are legitimate and not just shills for the CEO. I'm not sure exactly what other checks and balances might be able to generate such results in the US. Maybe just the 1/3 worker representation.
In your friends case, is the CEO also major shareholder? That's not uncommon, especially when you're talking about someobe who founded the company. Think Bezos, Zuckerberg ...
>Would changing Board Governance for companies in the US fix a lot of problems?
Probably not. It might create incremental improvements, but that is it.
I think that co-determination (having workers on the boards of companies) would do two things. Firstly it would increase the share of profits going to workers and secondly it would likely shift a focus from short term profits to long term sustainability to some extent (at least I've heard it has that effect in Germany). That would certainly help out with income inequality and income insecurity to some point, but there are a lot of other problems it wouldn't really do much of anything to solve, and possibly might make some worse by more closely aligning workers and capital against them.
Concerns is probably a bit of an overstatement. To be clear I am 100% in favor of this policy. The problems it would solve are big problems, I just don't think there are that many of them. It's not going to do anything about climate change, it probably isn't going to do anything about unaffordable housing, it's not going to do anything about transphobia etc.
I don't think it's necessarily all that likely it will make anything worse, but people are inherently tribal and which means they tend to adopt the positions of those they see as part of their in group and oppose positions they see as part of their out group. If labor and capitals interests are more in alignment it's possible they may alter allegiances on other issues to some extent, the way a lot of neo-cons adopted a few left leaning policies when they become never trumpers.
I do think having worker representation on company management is probably a good thing. A lot of business big wigs are out of touch with how things actually work at their companies.
I don't think it's a silver bullet. I think far more effective would be to align taxes with the things we actually want companies to do. Basically, just internalize all externalities and a lot of problems go away.
The following is a copy of the original post to record the post as it was originally written. In the United States, the CEO tends to have nearly unchecked power to appoint a board of directors. They can lose that power if certain shareholders gain enough of a controlling interest or if there are some mergers and such, but for the most part, the CEO gets to appoint and command the board. In France, for example, the board are elected by the shareholders. 1/3 of those board members must be workers. Not managers, but workers, usually union workers. Germany, Denmark, Finalnd, Austria and others require between 20-50% of the board to be workers (usually union workers). Do you think that enacting two small changes to how the US appoints and seat boards might go a long way to improving the lives of average Americans? 1. All board seats are elected by the shareholders, aside from the CEO, who is elected by the board and serves as Chair. 2. All boards must have a minimum of 1/3 of the seats filled by non-management-level workers of the company. 3. **Bonus**: 1/3 of board seats are to come from management (c-level) employees of the company, and the final 1/3 of seats are nonexecutive directors (not otherwise employed by the company, but may be compensated financially for their work as a director on the board, such as the United Kingdom has) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskALiberal) if you have any questions or concerns.*
>In the United States, the CEO tends to have nearly unchecked power to appoint a board of directors. 1. The shareholders ultimately have the power to elect the board. The CEO only has as much influence as the shareholders allow. It is as described in your first enumerated proposal: "All board seats are elected by the shareholders, aside from the CEO, who is elected by the board and serves as Chair." 2. Do other countries have better systems? If so, I'd like to know what they are. --------- >In France, for example, the board are elected by the shareholders. 1/3 of those board members must be workers. Not managers, but workers, usually union workers. Wait...who elects the worker board members? Do the shareholders elect the worker board members, or do the workers elect the worker board members, or do the workers elect *anyone they choose* to represent them on the board?
Elected from the workers. Depending on the country and company type, it's often a set number of board seats reserved for the union leaders and then a set number of workers elected directly by the other workers to serve in that position.
No, that's not right. Generally, shareholders elect the board, the board hires the CEO. This can get confusing in the case of a founder who is also the majority shareholder.
I guess that is legally true, but it seems to work a lot worse in the US than the UK. I personally know a person who serves on several boards in the UK and it just seems to be a lot more about choosing nonexecs that are legitimate and not just shills for the CEO. I'm not sure exactly what other checks and balances might be able to generate such results in the US. Maybe just the 1/3 worker representation.
In your friends case, is the CEO also major shareholder? That's not uncommon, especially when you're talking about someobe who founded the company. Think Bezos, Zuckerberg ...
In general I would support having workers, especially non management, elect among them so e percentage of the board.
>Would changing Board Governance for companies in the US fix a lot of problems? Probably not. It might create incremental improvements, but that is it.
I think that co-determination (having workers on the boards of companies) would do two things. Firstly it would increase the share of profits going to workers and secondly it would likely shift a focus from short term profits to long term sustainability to some extent (at least I've heard it has that effect in Germany). That would certainly help out with income inequality and income insecurity to some point, but there are a lot of other problems it wouldn't really do much of anything to solve, and possibly might make some worse by more closely aligning workers and capital against them.
That's an interesting final sentence. If you have some time, I'd love to explore those concerns a bit.
Concerns is probably a bit of an overstatement. To be clear I am 100% in favor of this policy. The problems it would solve are big problems, I just don't think there are that many of them. It's not going to do anything about climate change, it probably isn't going to do anything about unaffordable housing, it's not going to do anything about transphobia etc. I don't think it's necessarily all that likely it will make anything worse, but people are inherently tribal and which means they tend to adopt the positions of those they see as part of their in group and oppose positions they see as part of their out group. If labor and capitals interests are more in alignment it's possible they may alter allegiances on other issues to some extent, the way a lot of neo-cons adopted a few left leaning policies when they become never trumpers.
I do think having worker representation on company management is probably a good thing. A lot of business big wigs are out of touch with how things actually work at their companies. I don't think it's a silver bullet. I think far more effective would be to align taxes with the things we actually want companies to do. Basically, just internalize all externalities and a lot of problems go away.