Look at the law in each of the fifty U.S. states.
All have a provision similar to that of Maine’s section 716: "The directors and officers of a corporation shall exercise their powers and discharge their duties with a view to the interest of the corporation and of the shareholders."
These laws make it the legal duty of corporate directors and executives to maximize profits for shareholders.
Robert Hinkley would add a simply amendment: "… but not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates, or the dignity of employees."
The provision would be enforced by those who suffer at the hands of corporation wrongdoing. And in the case of intentional wrongdoing, by criminal sanction.
For 20 years, Hinkley worked as a corporate securities law expert, many of them as a partner at Skadden Arps Slate Meagher & Flom, one of the world’s largest corporate law firms.
He wants to spend the next few years campaigning for his amendment.
Now Robert, wouldn’t your little amendment, if it were enforced aggressively, for starters drive the internal combustion engine off the market?
"To the extent that auto companies can’t find a way to make the internal combustion engine work without emitting pollutants into the air, yes, it would," he says. "I prefer to think that it would spur the auto industry to find a way to make money for its shareholders that doesn’t poison their air at the same time. It can be done."
Hinkley wants zero pollution.
He would phase in his amendment over 10 or 15 years.
"We say — we are going to move from where we are today to no pollution in 10 or 15 years," he says. "And we expect corporations to make progress all the way through."
Isn’t your amendment way too broad, and vague — "Not at the expense of the environment, the dignity of employees, the public safety?" Your former colleagues at Skadden Arps are going to have a field day with this.
Not at all, he says.
The securities laws operate largely on the basis of companies being prohibited from making "false and misleading statements."
"By not spelling this out in greater detail, companies are generally more cautious," he says. "When it comes to the public interest, whether its the integrity of the securities markets or the environment, this is a good thing. I would expect the same results for my amendment."
"The language of the amendment is quite clear," he says. "It says we no longer want corporations to pollute, engage in unsustainable development, violate human rights, put dangerous products into the marketplace — or leave them there once their danger is understood — leave our communities in economic ruin by closing down plants and simply moving away, pay employees less than a living wage."
"Like the Bill of Rights, the language of the code is such that it can change with the culture over time."
Wait a second, Robert.
A corporation is not allowed to profit at the expense of "the dignity of employees"?
The Wall Street Journal editorial writers are going to have a field day. Some employee is going to say — you are making profits and that’s undignified.
"I think a court would tell that employee that maybe he should do something else with his life," Hinkley responds. "There is an old maxim that the law does not deal with trivialities. I think that maxim would be applied in this case. Dignity is one of those words like pornography. In the words of the Supreme Court ‘I know it when I see it.’ An employee’s dignity is violated when she isn’t paid a living wage, when her right to bargain collectively is not recognized, when she is forced to work overtime against her will, and when she is forced to work in unsafe conditions. I am sure there are others. The amendment will give employees a different status in the corporation from the one they now have. In addition to being the ‘company’s most important assets,’ they will have to start being treated that way."
But Robert, if you pass this law in Maine, then every major corporation will move to Delaware.
"I once sat next to a republican Delaware legislator at a dinner in New York and he said to me — ‘Bob, that’s a great idea. You get it passed in the other 49 states and I’ll get it done in Delaware.’"
Hinkley says that in Maine, there are about 40,000 corporations on the books — "39,950 of them are small local corporations which don’t pollute the environment, which don’t violate human rights, which don’t endanger the public safety, which treat all five to 10 of their employees with dignity."
"They are good corporate citizens," he says. "It is the big corporations that create the problem. That is where the system takes over. The local guy in downtown Ellsworth, Maine has to walk through the town everyday. If he messes with the public interest, the local people will not do business with his company and he will be out of business. It is the large public corporations that are creating the problem. If this law is passed, will these other 50 companies pack up and leave Maine? I don’t think so. They will see it is the trend."
Hinkley says that his former colleagues would for the most part be opposed to his amendment.
"Corporate lawyers are a peculiar lot," he explains. "We make our living by representing clients that are dedicated solely to the pursuit of their own interests. You have to be careful when you are talking to a group of people whose job it is to speak for someone else. Usually they are responding to only what they see to be in their clients’ interests, not what is in the public’s interest."
But he cites a Business Week/Harris poll which finds that 95 percent of Americans agree with him.
In that poll, 1,100 Americans were asked — which statement do you agree with more strongly?
The first is — corporations should only be concerned with maximizing profits for shareholders, and if they do, everything will be right with the American economy.
The second is — in addition to being concerned about shareholders, corporations should be concerned about their employees, the communities in which they operate, and sometimes they should sacrifice the interests of shareholders for the benefit of employees and the communities in which they operate.
Ninety-five percent choose the second.
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999.
(c) Russell Mokhiber and Robert Weissman