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Jailing Your Local CEO on Fiduciary Trust Violations
Executive compensation has grown out of line. CEO's pay outlandish fees to board members. They reciprocate with excessively high salaries and bonuses to the executives. This is a violation of the trust put in them by the share holders.
Here is the relevant precedent.
Judge Posner concluded that while judges shouldn't directly review corporate salaries, evidence of unreasonable compensation could be evidence of a breach of fiduciary duty. Yes, these are legal words, but they reveal a remarkable conclusion—courts should take a hard look at private-compensation issues—and demonstrate how far, and rapidly, the world has shifted. The two issues Judge Posner examined—setting CEO compensation at major companies and determining the fees to be paid to mutual fund-management companies on the base of trillions of dollars of mutual-fund investments—are central to the governance of our financial system. It is remarkable that a leader in Chicago School thought would acknowledge that the market is so broken that it can't be properly trusted on those two critical issues. Yet that is exactly what Judge Posner has concluded.
Eliot Spitzer, Slate
The following is a nifty definition of Fiduciary Trust Law. At the URL below you can find fill-in-the-blank legal forms costing $15.99 each. Being a grassroots guy, I never hire lawyers. This may be a bad idea if you are taking on Mobil Oil.
Breach of Fiduciary Trust Law
A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client.
A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf.
When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.
http://definitions.uslegal.com/b/breach-of-fiduciary-duty
