Which protections are these? I thought that incorporation didn't give any protections for maliciousness, it's just that DAs rarely go after executives because any particular blame is so distributed throughout the corporation that it would make any case difficult to prosecute.
The diffusion of responsibility is one of those protections. There should definitely be some strict liability for certain corporate malfeasance, where it doesn't too much matter who specifically did the deed, the executive/C-level is responsible and takes the fall (and maybe throw the BoD in there too). Then prosecution comes down to 'Did your company do X? If yes, you're guilty.'
A more realistic approach is to take away personhood rights that these corporations rely on. A 10 year ban on political donations and lobbying would be a good starting point. Then prison for the C-levels if they violate those terms which are directly under their control.
The idea that a 10000 year jail sentence must be served by every share holder disturbed in proportion to how much they owe would make “shareholder value” mean “not making me check into jail to serve my 2 days of the sentence for my 1 share” which might change corporate behavior a bit. Especially if insuring shareholders income against that risk becomes a line item in the budget.
I think shareholders might be too detached from decisionmaking for that to make sense. It'd definitely have a huge negative impact on stock values, but I'm not sure it would prevent corporate malfeasance.
Yes and the less you know the better for you when it eventually goes to court.
We had one of these cases recently in my country.
CEO of one of the biggest X in the country goes to trial for lying/not informing correctly about Y gross malfeasance.
Walks free after years of investigation, because didn't know about it.
Not only would that be effective in disincentivizing the malfeasance, it has the added benefit of limiting the scale of corporations to what execs can effectively manage.
In the Coast Guard and Navy it doesn't matter if the Captain didn't know what was going on, its their job to know what was going on and they're always the ones held responsible one way or another.
This is because if you are in the military your subordinates are bound by UCMJ to follow all lawful orders. The officers are granted complete authority over the subordinates but bear the responsibility for all the actions of those under their command. There is no civilian equivalent for this kind of relationship between authority and responsibility(though law enforcement should be using the same model).
Holding both companies and management responsible can be tricky as well. IIRC Exxon-Mobil had an aggressive policy of destroying records from projects as soon as they were legally able to prevent them from being used against the company in litigation or investigations. In this case, having poorly structured laws or regulations encouraged the company solve the problem of liability, rather than one of accountability.
I think after taking down Enron and Arthur Andersen and lot of people lost their jobs, which does not look good on TV. Politicians on both sides stopped supporting taking down execs/companys. So now the new normal is to push for fines.
I think what you're describing is the difficulty in "piercing the veil" of an LLC to hold individuals accountable. You can search that legal principle and learn more about how an LLC structure shields individuals from repercussions for their actions.
I remember a nice Obama quote "the buck stops with me".
If you get the big pay check for leadership it is your responsibility when shit goes bad. Sadly about the worst consequence a failed CEO has is that he/she doesn't get invited to play golf for a few years.
