Ex-Corporate Lawyer’s Idea: Rein In ‘Sociopaths’ in the Boardroom – NY Times – By – July 2019
Jamie Gamble spent most of his career as a partner at the law firm Simpson Thacher & Bartlett, which counts virtually every major company in the United States — including Facebook, General Motors, Google and JPMorgan Chase — among its clients.
Mr. Gamble has had an epiphany since retiring nearly a decade ago that is so damning of his former life that it is likely to give his ex-partners a case of agita. He has concluded that corporate executives — the people who hired him and that his firm sought to protect — “are legally obligated to act like sociopaths.”
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He made that determination about five years ago when he started to work on a novel that recently inspired him to compose a provocative essay* elucidating what he calls, based on his firsthand experience, a “complex network of horribles” in corporate America.
“The corporate entity is obligated to care only about itself and to define what is good as what makes it more money,” he writes in the essay. “Pretty close to a textbook case of antisocial personality disorder. And corporate persons are the most powerful people in our world.”
Yes, this about sums it up. Unrestrained capitalism is eviscerating our society.
Mr. Gamble’s change of heart will not exactly come as a revelation to the increasingly vocal group of investors, politicians and even chief executives who are pushing companies to be more responsible and to focus on metrics like environmental sustainability and corporate governance rather than on simply maximizing profits.
He doesn’t blame his former clients, exactly. He blames the law.
Perhaps most significantly, he has devised a provocative new governance rule that he believes will fix what ails corporate America, although he acknowledges in his essay that his idea “is likely to seem insane to senior corporate executives and boards of directors.”
Mr. Gamble’s proposal is this:
“every company devise a set of ethical rules to be part of their bylaws, a move that would potentially open them up to shareholder lawsuits should they fail to stick to those rules.
It’s hard to believe that something so simple could fix such an overbearing problem. But I think this idea has a chance to succeed because it works within the system and isn’t trying to make grand sweeping changes.
Companies, he suggests, should “adopt a binding set of ethical rules, approved by stockholders and addressing the key ethical dimensions of corporate life” including:
- Their “relationships with employees.”
- Their “relationships with the communities in which they produce and sell.”
- Their “relationships with customers.”
- Their “effects on the environment.”
- And their “effects on future generations.”
Today, corporate directors’ decisions are measured — at least from a legal perspective — on whether they maximize shareholder value.
I first heard the phrase “maximize shareholder value” in the ’90s during the Internet bubble. My first thought was: but what about “corporate values” that supposedly set the purpose of a company, like to provide the best service or create the best widget?
I quickly realized it was all just window dressing for the unstated, but overarching, drive to “maximize shareholder value”. All the stated values were subservient to this ethos.
Nowhere in their responsibilities are they expected to consider any stakeholder but the company.
He said that so far he had received mostly positive feedback, with some people, including law students at Harvard and Stanford, telling him the ethics rule did not go far enough.
Ultimately, Mr. Gamble’s proposal is a call to action, to persuade companies to behave not as sociopaths and have a bit more empathy.