RE: Olson response to Harrington on SQPQ and Markus with comments re: Kelso and Turnbull ideas and a proposal to develop an Experimentation Agenda

[Deborah Groban Olson <dgo@esoplaw.com>]

Dear Shann:

        I stand corrected on all points if your intent is to make all these
changes voluntary. I understood that you were seeking to require these
arrangements.  Do I now understand that your intentions is simply to
persuade corporations to adopt each of your proposed measures, including
limited term investor ownership within in competition with other issues
which provide "surplus profit"? If so, how will your proposed securities
attract investors. 

        I am not familiar with BOOT projects. 

        I am posting this to the Homestead section. I hope that is acceptable to
you. I am trying to stimulate discussion. Your responses are very
enlightening. One of the significant problems with this process is that
there is a huge amount of material. It is very easy for us to misunderstand
each other, as it is quite difficult for many of us to find the time to
read all the books and articles mentioned by all the participants.

        I am grateful for the legal research you have mentioned. Under the laws 
of
the states in which I practice, the "board of directors" has certain duties
to the shareholders. If there is more than one board, do they all have
these same duties? Do they divide them up? Are all the members of each
board liable for the actions of all the others? 

        I have created a variety of unitary board structures in which various
constituencies are represented. I have done the same with ESOP trustee
structures. Please give me some examples of situations under English,
Australian or US state laws where such boards are constituted and how they
divide up their duties and liabilities.

        Thanks,
        Deb

        At 05:52 PM 1/8/00 +1100, you wrote:
>Dear Deb
>
>Can you advise me on what authority you make the statement:
>
>"The Turnbull proposals call for a radical change in property ownership
>rights and state laws on
>unitary boards." ?
>
>From conversations I had with the former Chancellor of the Delaware court
>in 1998, Bill Allan, now a Professor at the New York University Law School,
>I understand that no change in state law would be required for Delaware
>corporations to adopt more than one board if they so desired.   I do not
>know any prohibition in other US states.  Have your surveyed state law in
>this regard?  Can you provide any references in this matter?  
>
>There is certainly no restriction in Australian law to have more than one
>board as I have done this as documented in my articles.  Nor is there any
>limitation in English corporate law for shareholders to change corporate
>constitutions in this way. In any event, it is not necessary to adopt more
>than one board to adopt property rights which change of time.
>
>Why do you also use the words "radical change in property ownership rights"
>when limited life equities are commonly found in limited liability
>partnerships, estate planning in family companies, in joint venture
>businesses, especially in former socialist countries and throughout the
>mining and entertainment industry?  As explained in my posting of January
>6th which I have posted again as it was apparently lost in cyberspace,
>governments now frequently adopt limited life and/or transferring property
>rights in Build Own Operate and Transfer (BOOT) infrastructure projects.
>
>Deb. Why do you state that are you are "nervous" about limited life
>property rights when governments are using them in BOOT projects?
>
>Is it that you are not familiar with these projects?
>
>Kind regards 
>
>Shann
>  
>
>At 04:57 AM 7/1/2000 , Deborah Groban Olson wrote:
>>Michael:
>>
>>      For implementation of  any of the changes proposed by all the proponents
>>in this group it will be necessary to go into the political arena. We
>>practitioners already use the voluntary mechanisms permitted under existing
>>laws to continue to create employee ownership and other forms of community
>>based ownership. However, the Kelso proposals require opening the Federal
>>Reserve discount window and further tax legislation. The Turnbull proposals
>>call for a radical change in property ownership rights and state laws on
>>unitary boards. 
>>
>>      I understand the critique of SQPQ that it injects the law into the
>>marketplace in an intrusive way. An alternative would be to create a more
>>voluntary form of it. I've thought about several options. Julia Markus is
>>proposing something like this on a voluntary basis in Canada and I still
>>await her draft. I've considered ideas such as letting companies pay part
>>of their taxes in stock for inclusion in funds such as labor venture funds.
>>Such stock tax payments would require that the fund be willing to take the
>>stock upon valuing it using IRS approved valuation standards. 
>>
>>      Sen. Weyden of Ore. is currently proposing stock option trade bonuses 
>for
>>companies involved in international trade. His logic is to make US workers
>>feel that international trade is good for them. I am unimpressed with this
>>idea, but it does point out that policy makers are looking for direction in
>>this area.
>>
>>      I also want to respond to your comment about involvement of labor 
>leaders
>>in pursuit of broad ownership agendas.  I have spent the last 20 years
>>working with the labor movement on employee ownership projects.  Employee
>>ownership is used grudgingly as a tactic, but is generally not seen as a
>>valuable strategy. It is interesting that in our privatization discussion
>>many people who have little involvement with labor have promoted labor's
>>greater involvement in employee ownership. While those from labor have
>>expressed much more reluctance. (Note the recent piece by Dave Wheatcroft
>>stating that privatizations have been a very negative experience for labor
>>and workers generally. Note also Per Ahlstrom's piece in this discussion,
>>in which he states that there is no single fix for the problems in the
world.)
>>
>>      Per is a pragmatist, as are most labor leaders. He sees the need to use 
>a
>>variety of strategies to address a variety of problems. In my recent
>>correspondence about COG with Lynn Agee, General Counsel for PACE, the
>>Paper, Chemical and Energy Workers union in the US, who has just been
>>involved in a large employee buyout, he was less intersted in empirical
>>data showing that wages and benefits are higher in employee owned companies
>>and that unionized employee owned companies are more successful in some
>>areas than there non-employee owned counterparts. He wrote
>>> "Actually my interest is more in demonstrating that a Unionized
>>Partnering work place is more successful than a nonunion adversarial
>>workplace."
>>
>>      We are not in a position to tell labor what they should be promoting
>>regarding broadened ownership. Instead, we need to lead with ideas and
>>examples that interest them as pragmatists. Furthermore, they are generally
>>very concerned about what is immediately politically possible. Much of what
>>we are discussing is aimed at a longer time horizon than that with which
>>they usually concern themselves. They have to deal with their members
>>immediate needs. That is why we do not have much active participation from
>>the labor leaders who are on this network. Yet, if we are able to develop
>>programs that are coherent, useful and communicable in clear, simple
>>language, devoid of religious intensity, we can have an impact. We have
>>labor leaders in the US, Canada, the UK, Australia, Austria, Beligum, South
>>Africa, Sweden, Germany, Poland, Egypt and a variety of other countries
>>(please excuse me if I have unintentionally left out the country of any
>>participants). 
>>
>>      Our job is to create policy proposals that can fix what is broken 
>without
>>breaking what is not. For example, perhaps SQPQ should only be attached to
>>licenses to use the airwaves, pollute the environment and other areas where
>>the people are giving up some exclusive general benefit, and should be
>>developed as a voluntary partial tax payment method. This could be
>>additional to, and not exclusive of, experiments with the opening of the
>>Federal Reserve discount window in certain areas to see if the Kelsonian
>>outcomes happen. I am also impressed with the Turnbull governance ideas as
>>something that could be proposed as a voluntary mechanism. In the US
>>enabling legislation would be necessary to permit these types of boards,
>>without requiring them. There would probably need to be anti-trust waivers
>>for these activities as well. I am very nervous about what the outcomes
>>might be in all areas of property management if we created the time limits
>>on property ownership Shann proposes. I would like to have further
>>discussion of that issue, and consider entertain proposals to experiment
>>with that concept as well.
>>
>>      I would like to see some way for us to offer a variety of mechanisms for
>>experimentation, rather than spending our time fighting over the absolute
>>correctness of one and only one method. I also believe that if we come up
>>with an experimentation package, we are much more likely to obtain
>>resources to do the experimentation. From the experimentation we will have
>>better data to continue on.
>>
>>Best regards,
>>Deb
>
>
>Shann Turnbull
>P.O. Box 266 Woollahra, Sydney, Australia, 1350
>Phone: 02 9328 7466 office; 02 9327 8487 home
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>