U.S. Senator  Elizabeth Warren has a plan to rewrite the rules for large U.S. businesses--and it's a provocative one.

The Democratic Senator from Massachusetts is introducing a new bill on Wednesday that would require corporate executives "to consider the interests of all major stakeholders in company decisions--not only shareholders," Warren wrote an op-ed for The Wall Street Journal. The Accountable Capitalism Act would require companies with more than $1 billion in annual revenue--including Facebook, Google, and Amazon--to comply with a federal charter that looks out for workers' interests. Currently, U.S. businesses secure corporation charters from states, not on the federal level.

One of the biggest changes that the bill proposes is for employees to elect at least 40 percent of board directors. The bill also seeks to impose limits on when executives can sell company shares. Directors and officers would have to hold shares for five years before
selling them, or in the case of a company stock buyback, three years. Warren's bill also takes aim at political contributions by requiring approval for all political expenditures from at least 75 percent of shareholders.

Warren says she hopes the bill will address the problem of stagnant wage growth at U.S. companies. She argues that instead of paying workers fairly and reinvesting profits, U.S. businesses have increasingly funneled earnings to shareholders.

"Workers aren't getting what they've earned," Warren writes, adding that her proposal follows the benefit corporation model used by companies including Patagonia and Kickstarter.

So is The Accountable Capitalism Act likely to find the support needed to become law? While it's too early to say, Vox's Matthew Yglesias does not expect the legislation to be popular with lawmakers. "If they thought the idea stood a snowball's chance in hell of happening, rich people would denounce it to anyone who would listen," he wrote.

Published on: Aug 15, 2018