Sen. Elizabeth Warren, D-Mass., will introduce legislation Wednesday aimed at making the nation’s largest companies accountable to employees and their local communities, not just shareholders.
In an op-ed for the Wall Street Journal, Warren said companies in the late 20th Century started operating in a way that made them slaves to shareholders.
“That shift has had a tremendous effect on the economy,” she wrote. “In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities.”
“But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders,” Warren added.
She said that change has also prevented large companies from ensuring wage growth kept up with productivity growth.
To give employees, communities and other stakeholders a leg up, her bill would require companies with more than $1 billion in annual revenue to obtain a federal corporate charter. That charter would require corporate directors to “consider the interests of all major corporate stakeholders—not only shareholders—in company decisions. Shareholders could sue if they believed directors weren’t fulfilling those obligations.”
Her bill would also let employees elect at least 40 percent of the company’s directors, and at least 75 percent of directors and shareholders would have to sign off on decisions to spend money on politics.
“For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans,” she wrote. “We should insist on a new deal.”
