Corpocracy: How CEOs and the Business Roundtable Hijacked the World's Greatest Wealth Machine - And How to Get It Back

by Robert A.G. Monks

Book Overview

Shareholder control over large corporations is worryingly weak and the unrestrained hunt for profits is taking a toll on the environment and society. In Corpocracy, corporate lawyer, venture capitalist, and shareholder activist Robert Monks reveals how corporations abuse their power and what we the people must do to rein them in. In a clear and careful analysis, Monks outlines a plan for reconciling the competing interests of corporations and society...

• Format: Hardcover
• Language: English
• ISBN: 0470145099
• ISBN13: 9780470145098
• Release Date: December 2007
• Publisher: Wiley
• Length: 272 Pages
• Weight: 1.10 lbs.
• Dimensions: 1.2" x 6.5" x 9.2"

Customer Reviews

An Authoritative Report!

Robert Monks begins by informing readers that he is a strong supporter of for-profit corporate enterprise. He then goes on to recite how the leaders of these enterprises have recently run amok in the U.S. "Efficiency," without regard for externalities (eg. pollution, off-shoring American jobs), using "GWAP" reporting (Gee, Whatever Accounting Principles), surrounded by board member, accounting firm, pay, board-evaluation consultant, and stock analyst conflicts of interest, fortified by think-tanks funded by corporations, and beyond accountability via ending the "one share, one vote" rule - their top leaders enjoy scandalous pay and retirement packages, without regard to organizational performance. At they same time today's corporations are expanding their realms by privatizing government roads, health care, and warfare functions, in the supposed name of efficiency - while actually usually costing more, providing lower service levels, and/or even less accountability. (Helping vitiate a key Democrat-party base of government workers, and gaining increased lobbying influence are additional benefits.) Other government "benefits" today's organizations enjoy include toothless law and regulation enforcement (eg. SEC, DOL), and the ability to shed expensive pension obligations through bankruptcy or simply walking away. Monks sees pension funds as having a key role in taming today's out of control corporations. Specifically, he touts Hermes Investment Management Company (a London pension fund for phone workers) as an example of what could be done. Monks also praises Elliott Spitzer for accomplishing far more than the SEC or DOL with fewer staff, CEOs Gary Immelt of G.E. and Frank Blake of Home Depot (replaced Robert Nardelli) as examples of principled leaders. One final comment: Late in his book Monks almost off-handedly remarks that 10% of market value ($1 trillion) was transferred from investors to corporate principal offers. He also asserts that about 95% of all stock options go to the top 15 or so officers. I don't for a moment question his conclusions - Monks' reputation is quite solid. However, I do wish he spent more time elaborating and emphasizing these points.

Captain Ahab Pursues the Great White Whale of Corpocracy

When, on some future date, the Mount Rushmore of Corporate Governance is carved into some mountainside, Bob Monks' profile should be chiseled into the stoneface in a position roughly corresponding to that of Washington's or Jefferson's. Present at the creation, Bob Monks has had a career in corporate governance that spans the transition from the early era when governance activists were seen as gadflies, tilting at windmills, to the current era when Institutional Shareholder Services (his creation) wields enormous power. Been there, done that - you name it and Bob Monks has done it because he has done everything in corporate governance. So what does Bob Monks have to tell us at a time when the conventional wisdom is that corporate governance activists have triumphed and managerial discretion has been constrained? As usual, his views are counter-intuitive: Corporations are today beyond shareholder control and dominate the political process, emasculating meaningful regulation. Many of his assessments are tart, pungent and disenchanted: "the SEC has become an advertisement for the mandatory sunset of government agencies" (p. 167); today, "we are . . . under the thumb of a corporate oligarchy, bent on plundering and unchecked by any effective ownership," (p. 191); "without effective regulation . . . and without institutional pressure to reform, most corporations - and the largest among them - will loot their own resources to enrich the very few at their helm" (p.186). Basically, he views corporations as self-perpetuating hierarchies in which boards are manipulated by senior executives. These assessments will seem unduly harsh to many of us, but this is a work of advocacy. Like Emile Zola writing "J'Accuse" in defense of Captain Dreyfus, Monks is not worried about overstatement. Still, if Bob Monks is not always fair, he is often fascinating. The strength of this book is not the nuanced subtlety of its judgments, but its description of life on the cutting edge of corporate governance - how it is actually practiced. Prescriptively, Bob Monks focuses more on shareholders than boards. He seems most annoyed with his own alma mater, Harvard, and similar foundations for their passivity as investors, and he is similarly critical of "socially responsible investors" who have strong prophylactic rules for what corporations may not do, but exercise little oversight over how they do what they may do. Monk's greatest concern is the sheer power of the "corpocracy." The danger is clear and present in his view that corporations, organized through groups such as The Business Roundtable, can dominate the political process and thwart the democratic majority. This book was written before the SEC in late 2007 rejected proposals for greater shareholder access to the proxy statement - a decision which he would no doubt cite as proof of his hypothesis. In truth, fear of corporate power is a recurrent theme in the classic literature of corporate governance. As he well know

With Courage, Trust & Accountability Can Be Restored

Corpocracy is an ugly word, not just because of its mixed roots, but because of the governance situation in the United States which it has been coined to describe. In this compelling book, Bob Monks has summarised the means by which American business interests have conspired to suborn the state. No-one else has his authority or breadth of experience in this field of corporate governance. A corporate lawyer and banker by calling, he headed the division in charge of ERISA in the political field and he helped launch Institutional Shareholder Services and LENS to prove that active investors create value. He has distilled his remarkable range of experience into a brief and highly readable polemic. In doing so, he argues that the balance of power between corporations, those who own their shares and those charged with regulating their conduct has to be redressed. It might, at first sight, seem that the situation which he analyses so penetratingly is peculiar to the United States and that the wider world need not actively concern itself with the author's message. This would be to underestimate the importance of this book. The lessons to be drawn from the consequences of the rise of the political power of American business, which it chronicles, are universal. In addition, given the global reach of American corporations, the need to restore their accountability to their investors within an effective regulatory framework has global implications. Corpocracy is not a lament, though it describes much that is lamentable. It is a sober and arresting account of the manner in which the author's personal efforts to persuade the appropriate authorities, regulators and major investing institutions to do their duty, morally and juridically, has met with little effective response. The book's impact is all the greater for the restrained manner in which Bob Monks describes how those appointed to discharge their statutory and fiduciary duties repeatedly failed to do so. Inaction by the gatekeepers, left the field open to the untrammelled rapacity of imperial CEOs. The balance of power between boards and CEOs in the United States remains a paradox, given the country's regulatory history of preventing accretions of power in relation to trusts and to banking. Nowhere else would it be possible to elect a director on a single vote, nowhere else could shareholder votes be invalidated by "ballot stuffing", nowhere else are shareholders so limited in their ability to raise issues at AGMs, which some directors may not even bother to attend. The prevailing concept of CEO/chairmen selecting their outside board members, thus compromising their independence, strengthens the hand of the CEO at the expense of that of the board. The response to this imbalance in governance terms is the financial track record of US corporations, but at whose expense has it been achieved? Bob Monks' answer is: "History will look back on the 1990s and early 2000s as a time when the principal offic

Understanding the corporate takeover of America

We seem increasingly to be living in an America where the big and little decisions are being made by those who run large corporations. All but invisible, the average American now receives her news from media owned by big business. We are inundated by advertising and marketing offensives -- both explicit and disguised -- to distraction, and we are represented in government -- national and local -- by individuals who serve mainly the objectives of corporations, having made it to office largely through the assistance of those very same corporations. Robert A.G. Monks has pulled away the covers, revealing who is in bed with whom, and very clearly articulating how we got to the unbalanced and unhealthy state we find ourselves in. This well-written book made it very clear to me -- someone with little interest in business or economics -- how our current cultural decline and the coinciding lack of any kind of central (spiritual) values beyond quantity and wealth have led to where we are. It gave me hope. Robert Monks has followed the path of the hero, hearing the call and pursuing his quest, though it makes him an outsider (see "Traitor to His Class"). From that somewhat isolated vantage point, he has something of great value to show us.

Astute, incisive, insightful, fearless, and right on the money

Robert Monks is a true visionary, and this assessment of corporate control of every institution set up to provide oversight or assure accountability will provoke a series of "aha" moments from anyone who has wondered why we permit corporations to determine everything from pollution levels to the outcome of elections. With mastery of the languages of finance, economics, business, politics, culture, and values (in all senses of the word), Monks ties together the Babel of vocabularies with analysis that is utterly clear-eyed and recommendations that are creative but utterly rational.