These investors want to know about the business ethical standards they live by because they know that misconduct can result in severe penalties.
I’m sure most investors are familiar with the concept of business ethics because they are the people who go into business. But they are not, nor should they be, the only ones who know how to live ethical. I’m sure that most investors are aware of the concept because it is one of the first things they learn in business school. But they are, and should, avoid getting their feet wet in the dirty parts of business because that could lead to serious problems in the future.
Businesses that are ethical can get away with a lot of things. They can be protected from government agencies and law enforcement because the government has a lot of experience in this area. They can even be protected from competitors because they can ensure that their business is treated fairly by the competition. But a business that is not ethical gets its foot in the proverbial fire. No matter how ethical the business, the way the business is run will make it more or less likely to cause a lawsuit.
You see, business owners use every trick in the book to avoid lawsuits. They do not hire an attorney; they do not consult with an attorney; and they do not discuss their legal options with an attorney. They go directly to their board of directors (or the top officials in their company) and ask for a meeting. They then tell the board that they need to fire the CEO, and they demand that the board vote to approve the CEO’s termination.
If you’ve ever been a member of a business board or other business decision-making group, you probably know the phrase “business owners do not hire an attorney.” It’s a fact. These same business owners who are going to sue you are also going to hire an attorney. But they’re not doing it for you. They’re doing it because they think it will help them avoid a lawsuit.
In a classic example of this conflict of interest, a business board meeting was recently held. The board was discussing the hiring of a new CEO, and one of the board members, who happens to be the CEO, told the board that he thought he was being fired. The board members, in an attempt to protect the CEO, voted to allow the CEO to vote on the matter.
This is the problem with shareholder democracy. The board members who are most likely to have a conflict of interest in the hiring of the CEO are the ones who are most likely to vote against hiring the CEO. But why? Because they care about the CEO. And, like a lot of people, they’re going to be very cautious about their vote.
Because investors, as they are called, care about their investment. They care about the company and their investment, and they care about whether the company is doing things correctly. But they care about things like company ethics and how the company is run, and how the company is run makes them money. To be able to vote and make a decision on whether the CEO should be allowed to vote, they need the support of the rest of the board and the CEO.
