The Corporate Governance Implications of Presidentialism

The U.S. Supreme Court’s embrace of Presidentialism has injected a new element into American public governance that in turn requires important changes in the corporate governance of American companies. The social welfare function that underlies the normative case for particular corporate governance institutions for public companies must now include an anti-authoritarianism component. In practical terms this means two things. First, in the internal governance of public companies, it means the creation of a special board committee, a Public Integrity Committee, that would resolve matters that it determined raised significant questions of presidential over-reach, its members compensated in cash only and serving staggered terms. Second, large asset managers need to divest themselves of discretionary voting power. This is best done through the establishment of several autonomous Voting Offices that engage in independent stewardship.