Why companies need owners

There is much to admire about Bob Monks—his sense of purpose, his thoughtfulness, his integrity, his seemingly boundless energy and enthusiasm for his work as he moves into his mid-70s. Bob is perhaps America’s preeminent shareholder activist, and he’s written a new book, his sixth, which is called Corpocracy: How CEOs and the Business Roundatable Hijacked the World’s Greatest Wealth Machine—and How to Get It Back. It’s the topic of today’s Sustainability column on Fortune.com and Cnnmoney.com.

I’ve known Bob for years, and profiled him in Fortune in 2002. (Here’s a link.) He cares about shareholder power, not just for its own sake, but because he thinks that companies that are accountable to engaged shareholders will be better citizens than those answerable to no one (i.e., most big companies, which have a dispersed and powerless shareholder base). It’s his belief that most shareholders—and particularly big, institutional shareholders, who own the entire market and are, as a result, essentially permanent shareholders—want more than just a healthy return on the capital they have invested in equities. They also want a healthy, just and peaceful world. And so, if companies were truly accountable to their owners, they would be more responsible.

Here’s how today’s column begins:

What this company needs is an owner,” declared Sam Zell, after completing the $8.2 billion deal that put him in charge of the Tribune Co., which owns newspapers including the Chicago Tribune, the Los Angeles Times and Newsday. “It needs someone who accepts the responsibility for what this company does.”

How true. Whether Zell, as a committed owner, will help save newspapers is an open question. But the fact that the real estate billionaire has a lot of skin in the game - $315 million of his money, plus the right to buy up to 40 percent of the company down the line - means that he, and his people, will be very focused on getting the job done.

All companies need owners who are engaged, committed and, ideally, thinking about long term. So argues Robert A.G. Monks, the shareholder activist, author, lawyer, entrepreneur and corporate director in a new book, called “Corpocracy: How CEOs and the Business Roundtable Hijacked the World’s Greatest Wealth Machine - and How to Get It Back” (Wiley, 2007, $29.95).

You can read the rest here.

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