Companies should be free to experiment with alternative securities and contracts with their suppliers of finance capital that allocate risk, reward and control in new ways. Firms should be able to issue securities with voting rights that vest over a period of time, for example, or provide for more than one vote per share if held by employees or other stakeholders. Once issued such securities, as well as more ordinary securities, should not be subject to unilateral or arbitrary changes in voting rights or other claims unless the initial registration statement explicitly notes that voting rights could be changed unilaterally. In other words, voting rights should be honored, but there should be no prohibitions against particular contract terms. If outside investors are leery of these securities, companies may find they are a higher-cost source of capital and avoid them. But companies might also find that the motivational effects of giving certain stakeholders special voting strength outweigh the negative effects of a higher cost of capital. Investors might even find that investing in companies where employees act like owners and exercise considerable control entails less risk than investing in firms whose managers have no monitors other than anonymous financial markets.
Monday, 28 September 2009
A final bit of Blair-ism
I mean this one, not this one. Here's a snippet that has relevance to the sorts of ideas Paul Myners has been toying with: