Recently in Corporate Governance Category

Source: Human Rights Watch, September 2, 2010

From the summary:
This 130-page report details ways in which some European multinational firms have carried out aggressive campaigns to keep workers in the United States from organizing and bargaining, violating international standards and, often, US labor laws.
See also:
Press release

Source: Celia Taylor, New York Law School Law Review, Vol. 54, No. 743, 2010

From the abstract:
The recent meltdown of the world's financial systems presents a unique opportunity to examine the very nature of the corporate form and to consider whether other models of business operation are needed. This article explains the idea of "social businesses" - profit-making, but not profit-maximizing entities that operate to further social good instead of exclusively generating returns for their shareholders. The article then explores the current legal regime for both profit and non-profit businesses under United States law, and suggests there is no ideal business structure currently available under which to operate a social business. In light of the increasing recognition that corporations can and should do more than profit-maximize, the article suggests a need for more flexibility to laws governing business entities.

Source: Jeff Hooke and Steve Wamhoff, Citizens for Tax Justice, July 9, 2010

From the summary:
A new report from Citizens for Tax Justice describes the biggest tax subsidies enjoyed by oil and gas companies and explains that these subsidies do nothing to encourage energy independence or cleaner energy.

In the wake of the disastrous oil spill in the Gulf of Mexico, the public and the media have turned their attention to some of the subsidies provided through the tax code to BP, the corporation that leased the ill-fated Deepwater Horizon drilling platform. The truth is that oil and gas companies have for years received a bonanza of unjustified tax breaks that serve only to boost profits for their shareholders.

The oil and gas industry is also resisting any taxes that would allow it to pay for its own messes. One proposal under consideration by Congress is an increase in the tax used to fund the Oil Spill Liability Trust Fund, which is currently 8 cents per barrel. Another is reinstating the Superfund Tax which expired in 1995. Both proposals have been met with furious opposition by the petroleum industry, which has spent a reported $340 million on lobbyists in the last 2-1/2 years.

Source: Monika Bauerlein and Clara Jeffery, Mother Jones, Vol. 35 no. 1, January-February 2010

More than a year later, has anybody been brought to account for crashing our economy? Don't be silly.
See also:
Moral Bankruptcy, By Joseph E. Stiglitz
Moguls without morals: Time for a market correction.

Thank You, Sir. May We Have Another?, By David Corn
The bailout made Americans hopping mad. So why aren't we furious at the fat cats who caused it?

Always Be Foreclosing, By Andy Kroll
Homeowners' pain is shady mortgage middlemen's gain.

Capital City, By Kevin Drum
It's hard to kick the finance lobby off the Hill when they own the place.

Faces of Greed: Meet the Madoff Minions, By Erin Arvedlund
Bernie Madoff claims he acted alone. Riiiiight.

Source: Progressive States Network, Stateside Dispatch, November 30, 2009

In this Dispatch, we will examine the need for corporate transparency, recent cases relating to the subject, and how the policy will benefit states dealing with massive deficits.

At the basic level, people deserve to know how businesses that benefit from public contracts, subsidies, or tax expenditures are spending tax dollars. Lawmakers must make sure that these businesses are creating jobs, saving the state money, and best serving the public interest. To foster a more targeted budget process, increase efficiency, and allow for future savings, states must adopt more stringent corporate disclosure and transparency legislation.

Problems due to lack of transparency in subsidy distribution, contract allocation, and hidden tax breaks are well-documented. Almost every week there is a story relating to states distributing subsidies with little to nothing to show for it, failing to save money from utilizing contractor services rather than state employees, and providing huge tax breaks to large corporations that often do not reflect the greater public interest. As well, states have been losing millions of dollars from declining corporate tax revenue. As a percentage of total state tax revenue, the corporate income tax has dropped significantly.

Source: Miriam A. Cherry, Jarrod Wong, Minnesota Law Review, Vol. 94, 2009

From the abstract:
In the spring of 2009, public outcry erupted over the multi-million dollar bonuses paid to AIG executives even as the company was receiving TARP funds. Various measures were proposed in response, including a 90% retroactive tax on the bonuses, which the media described as a "clawback." Separately, the term "clawback" was also used to refer to remedies potentially available to investors defrauded in the multi-billion dollar Ponzi scheme run by Bernard Madoff. While the media and legal commentators have used the term "clawback" reflexively, the concept has yet to be fully analyzed. In this article, we propose a doctrine of clawbacks that accounts for these seemingly variant usages. In the process, we distinguish between retroactive and prospective clawback provisions, and explore the implications of such provisions for contract law in general. Ultimately, we advocate writing prospective clawback terms into contracts directly, or implying them through default rules where possible, including via potential amendments to the law of securities regulation. We believe that such prospective clawbacks will result in more accountability for executive compensation, reduce inequities among investors in certain frauds, and overall have a salutary effect upon corporate governance.

Source: Paul Lansing and Cory Cruser, Employee Relations Law Journal, Vol. 35 no. 1, Summer 2009

The US government, through legislation, has provided protection for certain classes of citizens to prevent discrimination in the workplace. Among these protected classes are race, religion, gender, age, disability, etc. However, sexual orientation is not presently covered by the federal government. To fill this void, management should take it upon itself to provide protection in the workplace for the gay community.

Source: Sanford M. Jacoby, New Labor Forum, Vol. 18 no. 2, Spring 2009
(subscription required)

From the abstract:
Who wrecked the Big Three? Much of the blame is being heaped upon America's automotive union, the United Auto Workers (UAW), and its members. In December 2008, Senate Republicans refused to help the industry unless workers took huge pay cuts. The White House loan of $17 billion, delivered two weeks later, included provisions requiring that the UAW renegotiate its contracts. The labor provisions have nothing to do with economics. They reflect the GOP's antipathy toward organized labor, which has heavily supported President Obama, and its reflexive tendency to blame the victims. What about excessive payments to shareholders or executives?

Source: Nelson Lichtenstein, New Labor Forum, Vol. 18 no. 2, Spring 2009
(subscription required)

From the abstract:
There is nothing wrong with saving money in a deep recession. Unfortunately, Wal-Mart's "Everyday Low Price" strategy is itself as much of a cause of as it is a solution to the economic woes now engulfing so many American consumers. This is because the retail revolution pioneered by Wal-Mart has always been based on a lot more than bar codes and satellite uplinks, good roads, powerful trucks, and distribution center wizardry.

Founder Sam Walton linked his company's fortunes to the rightward shift in U.S. politics, social policy, and culture. Wal-Mart's era of enormous growth coincided with the rise to power and influence of Ronald Reagan, Milton Friedman, Jerry Falwell, Newt Gingrich, Bill Clinton, and the Bushes (father and son). These were the years of a global free trade unfettered by any social or environmental constraints, a minimum wage that shrank by one-third from its 1968 high, the rise of evangelical Protestantism--to which the company linked its distinctive work culture--and the destruction of both trade union power and much of American manufacturing capacity. In this environment, Wal-Mart and the rest of the big box retailers have thrived on the risk and instability that has been foisted onto their employees and suppliers. They churn their workforce, whipsaw their vendors, and have turned retirement pay and health care provision into a financial lottery for millions of workers. The 40-hour work week hardly exists: the retail economy relies on millions of part-time workers, while it is the norm for the few salaried staff members to stay on the job for many an extra hour, even as hourly workers find their lunch breaks and overtime pay stolen by hard-pressed store managers determined to make their labor budget hit the target generated by Bentonville's computers.

Source: Mary Anne Craft, Library Worklife, Volume 6, No. 5, May 2009
(subscription required)

We all deal in business ethics so often that we don't give it much thought. However, in this time of bailouts, bonuses and economic mess-ups, when ethics tend to attract scrutiny, it is refreshing to stop and note those who early on gave ethics their full commitment. Though the producers of chocolate and beer are rarely given as case studies in ethics, the stories of Hershey Chocolate's founder Milton Hershey, and the Trapist brewers in Westmalle, Belgium, provide excellent examples of ethical business practices.