Corporate Execs Step Up War on Shareholders

When economist Jeff Faux writes about the Party of Davos in his new book "The Global Class War" he is truly describing a war. And it isn't just a conventional war between management and workers. It is a war where executives are also targeting shareholders - that is to say, corporate management is trying to undermine the actual owners of corporations who challenge executives' interests. I noted a previous Financial Times story where corporate executives said they were going to step up surveillance of "activist shareholders" - and a new story today shows they weren't kidding.

The Financial Times now reports today that "Merrill Lynch is poised to become the first investment bank to dedicate a team to advise companies on the growing threat of activist investors." Notice the terminology - shareholders are now being referred to as a "threat" to the people who run the companies they own.

As I noted earlier, corporate executives have a lot to be worried about. Workers own a tremendous amount of shares of stock in pension funds - and they are increasingly using that power to push positive change. Take the California Public Employees Retirement System (CalPERS) That fund recently used its considerable stock holdings to sponsor stockholder resolutions cracking down on CEO pay and perks; forcing drug companies to lower their prices; and protecting worker benefits from corporate rip-off schemes.

Not surprisingly, Congress has weighed in on the side of corporate executives. Led by then-Congressman Chris Cox (R) - now head of the SEC - lawmakers passed the Private Securities Litigation Act - a bill that made it much harder for shareholders to use the judicial system to stop company management from ripping them off. As one market analyst noted, Cox's bill "paved the way for corporate chieftains basically to lie without fear of being sued" by shareholders who own the company.

You might think President Bush would weigh in on behalf of shareholders, what with his purported support for an "ownership society." But - shocker - he's stayed quiet. And the corporate elite's class war is allowed to continue.

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