Sen. Marco Rubio (R-Fla.) introduced the Mind Your Own Business Act, which would enable shareholders to hold woke corporations accountable.
Specifically, the legislation would require corporate directors to prove their “woke” corporate actions were in their shareholders’ best interest in order to avoid liability for breach of fiduciary duty in shareholder litigation over corporate actions relating to certain social policies. It would also incentivize corporate management to stop abusing their positions to advance left-wing social policies by increasing their personal liability to shareholders for breaches of fiduciary duty resulting from those policies.
Rubio told Fox Business News, “If a company is going to boycott a state or pull a product off the market because it has an American flag on it and they are concerned that might offend some people, or if a company is going to make these decisions under pressure from either the woke culture or some employee uprising internally, then they should have to justify to their large shareholders why they’ve done it and why that’s in the best interest of the company.”
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Rubio added that he wants to end corporate policies of “kowtowing to pressure from China or pressure from the woke cancel culture in America.”
In a Fox Business News guest column, Rubio wrote, “No more legal tricks that shield these corporate executives from accountability. If they really believe that being woke is good for business, they should have to say so—and prove it—under oath in court.”
Americans for Limited Government (ALG) has been a leader in fighting woke corporate tyranny. President Richard Manning said his group “strongly supports Senator Rubio’s leadership on this important issue.”
Manning added that “woke corporations seem to be jumping over each other to prove who is willing to give more money or change corporate direction to accommodate a loud group of far left activists who are characterized as ‘stakeholders.’ Pensioners, those who hope to retire someday and other investors, have a right to expect that the companies they own are acting in their interests and not being the pawns of people whose goal is to destroy the free market system.”
The National Center for Public Policy Research’s Free Enterprise Project (FEP), a free-market group that has partnered with ALG in the fight against corporate tyranny is also backing the Rubio bill.
“This is an important first step toward reining in the most aggressively politicized American corporations.” said Scott Shepard, FEP director.
Shepard explained why this bill is particularly important in today’s business climate:
Increasing numbers of corporate executives have indulged their own personal policy preferences at company – shareholder – expense, taking controversial, inflammatory and oft-times discriminatory and illegal positions on behalf of their companies. They sometimes claim that these actions are justified because the actions will, in some hazy way, benefit the company’s bottom line at some distant or unspecified time. But in the rare instances that they provide any evidence to support those claims, the evidence itself so biased and incomplete it only proved the point that their actions were not related to the company’s bottom line.
In other instances, corporate executives have justified their use of corporate assets to advance their personal policy preferences with claims that some group of stakeholders (e.g., employees, customers) have “demanded” that the action be taken. Various constituencies demand all sorts of things that business owners rightly ignore. In acceding to only some demands, the executives are employing their own policy preferences. Moreover, these executives make no effort to poll (in safe and unbiased conditions) their stakeholders to ascertain those stakeholders’ genuine interests and then to establish policy that genuinely and fully reflects that whole panoply of interests. Instead, they amplify the demands that suit their preestablished personal policy preferences, while suppressing dissent in many ways.
Rubio’s Mind Your Own Business Act is a private-sector solution to the problem of woke corporations. Specifically the bill:
- Requires large public companies listing on national stock exchanges to provide shareholders with significant holdings with certain privileges with respect to claims for breach of fiduciary duty under covered circumstances.
- Covered circumstances include if a company takes an action on a primarily non-pecuniary basis in response to State law, boycotts a class of persons or industry on a primarily non-pecuniary basis, or uses primarily non-pecuniary public reasoning for an action.
- Corporate defendants would be bound by presumptions that pecuniary interest does not include common defenses used to defend exercises of business judgment, including the media image of the company or employee morale.
- Ensures that for claims of breach of fiduciary duty against management brought by shareholders under these covered circumstances, management would have the burden of proof and, if found in breach of their duties, be liable without indemnification by the company for a minimum amount of damages and attorney’s fees.
National Center Executive Vice President Justin Danhof, Esq., who directed FEP for nine years, applauded Sen. Rubio for swimming against the tide.
“There are very few leaders willing to stand up to the corporate elites who are corrupting our culture with all manner of woke policy positions and corporate posturing meant to please the Davos crowd,” said Danhof. “That’s what makes Senator Rubio’s actions stand out, and why conservatives, particularly conservative investors, should laud this legislation.”
Catherine Mortensen is Vice President of Communications at Americans for Limited Government.
Cross-posted with The Daily Torch
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