The Appearance of Reality: Elect
What do we mean when we talk about electing directors?
2010 culminated a period of years during which the fundamental dynamics of Corporate Governance were diluted into virtual meaninglessness. Recently, I’ve been thinking about words that that seem straightforward but whose meanings has become less and less clear to me (see Appearance of Reality post 3/13/11). We all know what these words mean in a literal sense but in the context of governance, of business and of our post-crash world do they still mean the same thing?
Over the next few weeks we invite your input on some core governance concepts. We hope to better understand what is meant when we use these terms in relation to governance and business and even politics. I look forward to your thoughts -- comment on the site or write to me at info@ragm.com.
Elect
To start, the process by which directors are chosen is described as an election. And yet, virtually no one would describe the reality of how individuals accede to board membership as an election in the sense that word is generally understood by political scientists. Without pausing overlong to describe the actualities, it is at least clear that no individual appears on the company’s proxy statement for election to a vacancy except with the approval of the chief executive officer and the incumbent board members. It is equally clear that there are only as many individuals enumerated on the proxy card as there are vacancies.
All of this compels the conclusion that the election is a ritual without meaning in the corporate world. Why then do we insist on using a word that plainly does not describe what actually happens? This evokes the marvelous novels describing “double think” – 1984 and Brave New World –
“This was where “doublethink” came into play, minds were trained to hold contradictory positions simultaneously and unquestioningly- for example you had to believe at one and the same time that Democracy was impossible and that the Party was the guardian of democracy.” (Orwell, Nineteen Eighty-Four)
Here are my questions:
Dean -- The consistent question is the accountability of power conferred on to corporations to any kind of public entity – shareholders, government, ngo – motivated to monitor, capable of evaluation, and powerful enough to require enforcement.