I like the idea of civil judgements that require responsible individuals to remove themselves from the company. And void any forward looking renumeration in their contracts.
Personal fines too, such as returning past remunerations during the problematic time in question. Salaries. Stock grants.
There is no such thing as an incentive, that doesn't incentivize someone. Relatively small fines relative to revenues and profits don't incentivize anything.
Alternatively, if fines really were big enough to turn large companies around (i.e. not just the enforced, but other companies seeing the enforcement), heads would roll, but would they be the right ones given those in charge are unlikely to fire themselves? And shareholders are the ones really paying the fines, are they really the culprits?
The incentives to act in good faith, should be placed very directly on the individuals whose choices dictate the good/bad faith. Starting and staying largely with the CEO, and the direct line of reports from the CEO down to the relevent decisions.
You don't want anyone who mattered to have cover. You want CEO's policing their own, and their reports pushing back upward against poor directives.
The only cover for relevent actors would be a record of pushing back against those who pushed through poor behavior.
TLDR: Limited liability should protect non-managing shareholders, but not bad actors within a company. Decisions makers should always be held directly responsible for their decisions. Any other system is perverse.
I think both things are needed. Despite what you're saying, shareholders have the ultimate responsibility and control over the company: they own it, they name the executives, and all the profits are ultimately returned to them. So it's absolutely necessary for the shareholders to be penalized, massively, if they profitted massively off of illegal business practices. Even if the executives were hiding this illegality from them, they are still responsible for having set up the company in a way that allowed that.
If you only punish the executives for illegal business practices, but leave the company alone, then you create an incentive to hire patsies as executives, continue letting them do illegal stuff, go to jail, and pay them handsomely after they get out.
Ultimately it has to be the company that's losing money when the company made money from illegal business, otherwise the company can just find other people willing to continue and provide for everyone who gets caught.
> Ultimately it has to be the company that's losing money when the company made money from illegal business, otherwise the company can just find other people willing to continue and provide for everyone who gets caught.
You are so right. The board & shareholders are in the path of responsibility and not recognizing that would be a call for both to use and abuse executives as scapegoats.
> There is no such thing as an incentive, that doesn't incentivize someone.
It's wild how the public discourse on incentives is so split. On one hand, the poor are guilty until proven innocent of six dimensional chess to eek "unearned" pennies from social programs, yet the very idea that mega billionaires might pull easy, obvious levers for unethical mega million payouts is one that must beg and scrape for consideration.
Personal fines too, such as returning past remunerations during the problematic time in question. Salaries. Stock grants.
There is no such thing as an incentive, that doesn't incentivize someone. Relatively small fines relative to revenues and profits don't incentivize anything.
Alternatively, if fines really were big enough to turn large companies around (i.e. not just the enforced, but other companies seeing the enforcement), heads would roll, but would they be the right ones given those in charge are unlikely to fire themselves? And shareholders are the ones really paying the fines, are they really the culprits?
The incentives to act in good faith, should be placed very directly on the individuals whose choices dictate the good/bad faith. Starting and staying largely with the CEO, and the direct line of reports from the CEO down to the relevent decisions.
You don't want anyone who mattered to have cover. You want CEO's policing their own, and their reports pushing back upward against poor directives.
The only cover for relevent actors would be a record of pushing back against those who pushed through poor behavior.
TLDR: Limited liability should protect non-managing shareholders, but not bad actors within a company. Decisions makers should always be held directly responsible for their decisions. Any other system is perverse.