The twilight of the public corporation in the US

The twilight of the public corporation in the US

Or, how did we
get from here…
The twilight of the
public corporation
in the US
…to here…
…and
how
does it
matter?
Jerry Davis
The University of Michigan
Business History Conference
March 29, 2012
1889-2012*
Remember 1974?
~2007-2011
A few giant corporations dominated the economy
30 “blue chips,” 1974
3
Allied Chemical
Eastman Kodak
Owens-Illinois Glass
Alcoa
Exxon
Procter & Gamble
American Can
GE
Sears Roebuck
AT&T
General Foods
Swift & Co
American Tobacco
GM
Texaco
Anaconda Copper
Goodyear
Union Carbide
Bethlehem Steel
International Harvester
United Technologies
Chevron
International Nickel
U.S. Steel
Chrysler
International Paper
Westinghouse Electric
Du Pont
Johns-Manville
Woolworth
10% of the private workforce labored at 25 firms
COMPANY
GM
AT&T
FORD
SEARS ROEBUCK
ITT
GE
IBM
CHRYSLER
JC PENNEY
GTE
WESTINGHOUSE
US STEEL
GOODYEAR
EXXON
RCA
KMART
SINGER
EASTMAN KODAK
DU PONT
BETHLEHEM STEEL
SAFEWAY
A&P
UNION CARBIDE
INTL HARVESTER
LITTON INDUSTRIES
90 white men each served on 5+ corporate boards
ADAMS, CHARLES F.
AYERS, THOMAS G.
BENNETT, GEORGE F.
BERCHER, HARRY O.
BINGER, JAMES H.
BROWN, CHARLES L.
BROWN, COURTNEY C.
BROWN, R. MANNING, JR.
CARLSON, EDWARD E.
CHAMBERS, M.R.
CHAMPION, GEORGE
CISLER, WALKER L.
CONNOR, JOHN T.
COOLEY, RICHARD P.
COWLES, GARDNER
COX, EDWIN L.
CUMMINGS, TILDEN
CUNNINGHAM, HARRY B.
DAMON, ROGER C.
DONNELLEY, GAYLORD
ETHERINGTON, EDWIN D.
FINLEY, JAMES D.
FREEMAN, GAYLORD
FUNSTON, G. KEITH
GATES, THOMAS S.
GOLDSTON, ELI
GRAHAM, DONALD M.
GRAHAM, WILLIAM B.
GRAY, JOHN D.
GWINN, ROBERT P.
EMPLOYEES (thousands)
810.92
798.934
474.318
439.493
438
388
274.108
273.254
200
196
194.1
184.794
155.4
137
126
125
122
120.7
118.423
118
117.221
113.8
109.417
107.89
105.4
Source: Compustat Annual Industrials
5
(And probably met at the Bohemian Grove)
HARDER, HOWARD C.
HARPER, JOHN D.
HAUGE, GABRIEL
HEINEMAN, BEN W.
HENLEY, HENRY H., JR.
HILLMAN, HENRY L.
HOLLAND, JEROME H.
HUMPHREY, GILBERT W.
JOHNSON, HOWARD W.
JOHNSON, WILLIAM B.
KAISER, EDGAR F.
KARNES, WILLIAM G.
LAFORCE, ARNOLD R.
LAPHAM, LEWIS A.
LAY, HERMAN W.
LEARSON, T. VINCENT
LEITHEAD, BARRY T.
LEVY, GUSTAVE L.
LILLEY, ROBERT D.
LUKE, HUGH D.
MARKS, HARRY T.
MCCORMICK, BROOKS
MEESE, WILLIAM G.
MENK, LOUIS W.
MEWHORT, ROLAND A.
MEYER, JOHN M., JR.
MILLER, ARJAY
MITCHELL, DON G.
MITCHELL, HAMILTON B.
MORGAN, GRAHAM J.
MORGENS, HOWARD J.
MUNROE, GEORGE B.
NYROP, DONALD W.
OELMAN, ROBERT S.
PALMER, EDWARD L.
PEARSON, NATHAN W.
PETERKIN, DEWITT, JR.
PHALEN, CLIFTON W.
POTTER, KEITH R.
PROCKNOW, DONALD E.
PYNE, EBEN W.
ROMNES, H.I.
RUSSELL, GEORGE
SCHOENHOFEN, LEO H.
SIVAGE, GERALD A.
SMILEY, DONALD B.
STANTON, FRANK
STEWART, ROBERT H., III
STUART, ROBERT D., JR.
THOMAS, FRANKLIN A.
THOMAS, JOSEPH A.
TYSON, CHARLES R.
VENEMA, MAYNARD P.
WASSON, E. HORNSBY
WATLINGTON, JOHN F., JR.
WILLIAMS, ALBERT L.
WILSON, KENDRICK R., JR.
WORTHINGTON, LESLIE B.
WRIGHT, JAMES O.
WRISTON, WALTER B.
6
(And probably hatched unspeakable conspiracies)
7
A vision of a corporate-centered society
Some premises of the corporate-centered society
““The factory system, the basis
of the industrial revolution,
brought an increasingly large
number of workers directly
under a single management.
Then, the modern corporation,
equally revolutionary in its
effect, placed the wealth of
innumerable individuals under
the same central control”
1.
2.
3.
4.
The typical corporation makes tangible products
Corporate ownership is broadly dispersed
Corporate control is concentrated
Corporations aim to grow bigger in assets and
number of employees
5. Corporations live a long time
9
10
Manufacturing employment is increasingly rare in the US
Since January 2001,
the US has shed 5.5
million jobs in
manufacturing–
one in three
1.The typical corporation makes
tangible products
Proportion of US private labor force employed in
manufacturing and retail, 1939-2010 (Source: BLS)
11
As of March 2009,
more Americans were
unemployed than
were employed in
manufacturing
The largest US employers have shifted from
manufacturing to retail and other services
Retail jobs are not like manufacturing jobs
10 Largest US Corporate Employers, 1960-2010
1960
GM
AT&T
FORD
GE
US STEEL
SEARS
A&P
EXXON
BETH. STEEL
ITT
Manufacturing
1980
AT&T
GM
FORD
GE
SEARS
IBM
ITT
KMART
MOBIL
GTE
Oil
2010
WAL-MART
TARGET
UPS
KROGER
SEARS HLDGS
“AT&T”
HOME DEPOT
WALGREEN
VERIZON
SUPERVALU
• Median hourly wage in
“Motor Vehicle
Manufacturing” for
“Production Occupations”
(May 2008) : $27.14
• Median tenure with current
employer in “Transportation
Equipment Manufacturing”
(Jan. 2004 CPS): 8 years
Wal-Mart now
employs roughly
as many
Americans as the
20 largest
manufacturers
combined
Services
13
• Median hourly wage in
“General Merchandise
Stores” for “Sales and
Related Occupations” (May
2008) : $9.33
• Median tenure with current
employer in “Retail Trade”:
3 years
• Mean weekly hours worked
at Wal-Mart: 34
• Estimated annual turnover
at Wal-Mart: 40%
There was a time
when the owners of
corporations were
dispersed “widows
and orphans”
2. Corporate ownership is broadly
dispersed
15
16
Now widows and orphans buy mutual funds and ETFs…
Source: Spectrum 13F database, various years
17
18
…and BlackRock is the largest shareholder of one in
five US corporations
…and Fidelity is the largest shareholder of one in
ten US corporations…
• BlackRock has $3.5 trillion in assets under
management, including iShares
• BlackRock owns 5% or more of over 1800 US
corporations
• BlackRock is the single largest shareholder of one
in five US corporations, including
– ExxonMobil, Chevron, GE, AT&T, Verizon, JP
Morgan Chase, Citigroup…and over 800 others
# of listed
firms in US
3833
5187
5828
4423
Source: Spectrum 13F and
13G databases, various
years
19
From Pujo to ~ 2001, corporate elites formed a wellconnected old boys’ network via shared directors…
GOLDEN WEST FINANCIAL CORP
ONEOK INC NEW
WESTERN RESOURCES INC KS
ABM INDUSTRIES INC
MURPHY OIL CORP
REGIONS FINANCIAL CORP
ALASKA AIR GROUP INC
AVISTA CORP
SCHOLASTIC CORP
The Fortune
1000 board of
directors
network, 2001
LANDSTAR SYSTEM INC
TESORO PETROLEUM CORP
PERFORMANCE FOOD GROUP CO
GEORGIA GULF CORP
UNIVERSAL FOREST PRODUCTS INC
TECH DATA CORP
NATIONAL FUEL GAS CO
QUINTILES TRANSNATIONAL CORP
WATSCO INC
PROVIDENT FINANCIAL GROUP INC
NASH FINCH CO
OLD KENT FINANCIAL CORP
PINNACLE WEST CAPITAL CORP
SILGAN HOLDINGS INC
CHAMPION ENTERPRISES INC
M&T BANK CORP
GENERAL CABLE CORP NEW
DEVON ENERGY CORP NEW
JDS UNIPHASE CORP
FAIRCHILD SEMICONDUCTOR INTL INC
UNITED STATIONERS INC
SERVICE CORP INTERNATIONAL
HUB GROUP INC
PAYCHEX INC
SIERRA PACIFIC RESOURCES
GENESIS HEALTH VENTURES INC
FOAMEX INTERNATIONAL INC
PUGET ENERGY INC
RGS ENERGY GROUP INC
GREENPOINT FINANCIAL CORP
PAYLESS CASHWAYS INC
PHAR MOR INC
PSS WORLD MEDICAL INC
JABIL CIRCUIT INC
UNIVERSAL CORP
EMCOR GROUP INC
VALERO ENERGY CORP NEW
PENTAIR INC
MICRON TECHNOLOGY INC
3. Corporate control is concentrated
MITCHELL ENERGY & DEVELOPMENT CORP
MILACRON INC
ABERCROMBIE & FITCH CO DE
STEELCASE INC
COVENTRY HEALTH CARE INC
MASCO CORP
LANDAMERICA FINANCIAL GROUP INC
KELLY SERVICES INC
GREAT LAKES CHEMICAL CORP
TYSON FOODS INC
PUBLIC SERVICE CO OF NEW MEXICO
MAXXAM INC
ALTERA CORP
MANPOWER INC
MICROAGE INC
SPARTAN STORES INC
DEL WEBB CORP
WHOLE FOODS MARKET INC
ALLIANT ENERGY CORP
PERKINELMER INC
HARTFORD FINANCIAL SERVICES GROUP I
LEAR CORP
MARSHALL & ILSLEY CORP
INTERNATIONAL MULTIFOODS CORP
PATHMARK STORES INC
EMC CORP
QUANTA SERVICES INC
TELEPHONE & DATA SYSTEMS INC DE
WHX CORP
INTERSTATE BAKERIES CORP
DIEBOLD INC
LAM RESEARCH CORP
TORO CO
CYPRESS SEMICONDUCTOR CORP
POLARIS INDUSTRIES INC
TELLABS INC
NIAGARA MOHAWK HOLDINGS INC
BORDERS GROUP INC MI
WESTERN DIGITAL CORP
FURNITURE BRANDS INTERNATIONAL INC
MARK IV INDUSTRIES INC
ADMINISTAFF INC
VECTREN CORP
BROADWING INC
WILLAMETTE INDUSTRIES INC
MERISEL INC
DTE ENERGY CO
CARDINAL HEALTH INC
WHIRLPOOL CORP
FLOWSERVE CORP
E W SCRIPPS CO OH
MOHAWK INDUSTRIES INC
SMURFIT STONE CONTAINER CORP
AMERICAN ELECTRIC POWER CO INC
HEILIG MEYERS CO
KENNAMETAL INC
LSI LOGIC CORP
HEALTH NET INC
WESCO INTERNATIONAL INC
TERADYNE INC
SUPERVALU INC
WORLDCOM INC NEW
FOOTSTAR INC
REYNOLDS & REYNOLDS JACOBS
CO
ENGINEERING GROUP INC
UNIFI INC
QWEST COMMUNICATIONS INTERNATIONAL
AGCO CORP DE
MANDALAY RESORT GROUP
STANDARD REGISTER CO
DOLLAR GENERAL CORP
RITE AID CORP
GALILEO INTERNATIONAL INC
ANIXTER INTERNATIONAL INC
MCN ENERGY GROUP INC
CALPINE CORP
SMITHFIELD FOODS INC
PRINCIPAL FINANCIAL GROUP INC
AMERICAN AXLE & MANUFACTURING HLDGS
IMATION CORP
FMC CORP
VOLT INFORMATION SCIENCES INC
CABLEVISION SYSTEMS CORP NEW
DQE
OCCIDENTAL PETROLEUM CORP
LINENS
UNITED AUTO GROUP
INCN THINGS INC
AK STEEL HOLDING CORP
STATE STREET CORP
LIZ CLAIBORNE INC
MELLON FINANCIAL CORP
A O SMITH CORP
ALBERTSON S INC
VALSPAR CORP
HEALTHSOUTH CORP
RYLAND GROUP INC
ITT INDUSTRIES INC
HUMANA INC
BANTA CORP
LA Z BOY INC
HILLENBRAND INDUSTRIES INC
NAVISTAR INTERNATIONAL CORP
TRIGON HEALTHCARE INC
SUNGARD DATA SYSTEMS INC
MOLEX INC
OXFORD HEALTH PLANS INC
STATER BROS HOLDINGS INC
PREMCOR USA INC
TIMKEN CO
UTILICORP UNITED INC
UAL CORP
BANK ONE CORP
SHERWIN WILLIAMS CO
FIRST TENNESSEE NATIONAL CORP
DOW CHEMICAL CO
ABBOTT LABORATORIES
UNOCAL CORP
ALLIED WASTE INDUSTRIES INC
H & R BLOCK INC
MARRIOTT INTERNATIONAL INC NEW
PACKAGING CORP OF AMERICAOWENS & MINOR INC NEW
SUMMIT BANCORP NJ
ROCKWELL INTERNATIONAL CORP NEW
MBNA CORP
HCA INC NEW
GOODYEAR TIRE & RUBBER CO FEDERAL HOME LOAN MORTGAGE CORP
SCIENTIFIC ATLANTA
INC
LUCENT TECHNOLOGIES
INC
EATON CORP
WARNACO GROUP INC
AMERADA HESS CORP
FRONTIER OIL CORP WY
PRIMEDIA INC
KERR MCGEE CORP
ANHEUSER BUSCH COS INC
NORFOLK SOUTHERN CORP
MANOR CARE INC NEW
EDISON INTERNATIONAL
DUN & BRADSTREET CORP DE NEW
WINN DIXIE STORES INC
JONES APPAREL GROUP INC
EL PASO CORP
AMERICAN GREETINGS CORP
NORTHROP GRUMMAN
CORP
TJX COS
INCNEW
TRW INC
BOEING COOMNICOM GROUP INC
SUNTRUST BANKS
INC COLA ENTERPRISES INC
COCA
QUORUM HEALTH GROUP INC
NICOR INC
KEYSPAN CORP
RALSTON PURINA CO
SOUTHERN CO
CENTEX CORP
SCHERING PLOUGH CORP
LOWE S COS INC
ROADWAY CORP
PROVIDIAN FINANCIAL CORP
MARSH & MCLENNAN COS INC
COLGATE PALMOLIVE CO
BANK OF AMERICA CORP
KEYCORP OHIO MCKESSON CORP DE
NACCO INDUSTRIES INC
AUTONATION INC DE
ANNTAYLOR STORES CORP
YELLOW CORP
MERRILL LYNCH & CO INC
AMES DEPT STORES INC
ENTERGY CORP DE
PAYLESS SHOESOURCE INC NEW
PROGRESSIVE CORP
BEAR STEARNS COS INC
PRICELINE COM INC
LITTON INDUSTRIES INC
PEP BOYS MANNY MOE & JACK
CIT GROUP INC
BORDEN INC
AUTOMATIC DATA
FLEMING
PROCESSING
COS INCINC
PITTSTON CO
ENGELHARD CORP
UNOVA INC
DIMON INC
AMEREN CORP
LINCOLN NATIONAL CORP
BAUSCH & LOMB INC
DELTA AIR LINES INC
AOL TIME WARNER INC
FPL GROUP INC
LEGG MASON INC
APPLE COMPUTER INC
DIME BANCORP INC
COX COMMUNICATIONS INC DE
BECTON DICKINSON & CO
MERCK & CO INC
US AIRWAYS GROUP INC
CENDANT CORP
BELLSOUTH CORP
FLUOR CORP NEW
COCA COLA CO
ENTERASYS NETWORKS INC
TRIAD HOSPITALS INC
AMERICAN WATER WORKS CO INC
WACHOVIA CORP NEW
MAY DEPARTMENT STORES CO
BELO CORP
VULCAN MATERIALS CO
EQUIFAX INC
HARRIS CORP FLA
WASHINGTON POST CO
SPORTS AUTHORITY INC
DOVER CORP
VIASYSTEMS GROUP INC
ARAMARK CORP
DYNEGY INC IL
BOISE CASCADE CORP
DIAL CORP NEW
KROGER CO
TEXAS INSTRUMENTS INC
LONGS DRUG STORES CORP
TELEFLEX INC
BERGEN BRUNSWIG CORP
MCLEODUSA INC
SAFEWAY INC
GATX CORP
AMR CORP
OWENS CORNING
CORPUNION PACIFIC CORP
BURLINGTON
NORTHERN
SANTA
FE CORPGOODRICH
PARKER
HANNIFIN
CORP
BLACK & DECKER
CORP
LANIER WORLDWIDE INC
BRUNSWICK CORP
NATIONAL CITY CORP
ANALOG DEVICES INC
TRANSOCEAN SEDCO FOREX INC
SAFEGUARD SCIENTIFICS INC
ALLEGHENY TECHNOLOGIES INC
AMERICAN EXPRESS CO
AMERICAN INTERNATIONAL GROUP INC
CIGNA CORP
KNIGHT RIDDER INC
PACCAR INC
RYDER SYSTEM INC
UNISYS CORP
STILWELL FINANCIAL INC
GENTEK INC
UNITRIN INC
KINDER MORGAN INC NEW
REEBOK INTERNATIONAL LTD
SBC COMMUNICATIONS INC
CHARLES SCHWAB CORP
FLOWERS FOODS INC
COORS CO
TRINITY INDUSTRIESADOLPH
INC
INTERPUBLIC GROUP OF COS INC
SONOCO PRODUCTS CO
APPLERA CORP
METRIS COS INC
AMSOUTH BANCORPORATION
FOOT
VERIZON COMMUNICATIONS
INC LOCKER INC
MORGAN STANLEY DEAN WITTER & CO CATERPILLAR INC
PROCTER & GAMBLE CO
DELL COMPUTER CORP
SUNOCO INC
COOPER INDUSTRIES INC
GENERAL MILLS INC
GEORGIA PACIFIC
CORP RAND CO
INGERSOLL
GENERAL DYNAMICS CORP
BRISTOL MYERS SQUIBB CO
BANK OF NEW YORK
CO INCCLARK CORP
KIMBERLY
DOMINION RESOURCES INC VA
WESTVACO CORP
COMMUNITY HEALTH SYSTEMS INC
REVLON
W W GRAINGER
INCINC
EOG RESOURCES INC
HASBRO INC
PG&E CORP
IT GROUP INC
POPULAR INC
AMPHENOL CORP
JOHNSON & JOHNSON
UNITEDHEALTH GROUP INC
TEXACO INC SARA LEE CORP
LUBRIZOL CORP
WESTPOINT STEVENS INC
WYNDHAM INTERNATIONAL INC
BMC SOFTWARE INC
TIFFANY & CO
NEWELL RUBBERMAID INC
DUKE ENERGY CORP
CIRCUIT CITY STORES INC
PRAXAIR INC
SYSCO CORP
MATTEL INC
POLYONE CORP
USA EDUCATION INC
CSK AUTO CORP
OWENS ILLINOIS INC
J P MORGAN CHASE & CO
BEST BUY CO INC
OGE ENERGY CORP
INC
QUAKER OATS CO
INTERNATIONAL BUSINESS MACHINES COR
CONOCO INC
NATIONAL SERVICE INDUSTRIES INC
WM WRIGLEY JR CO
CH2M HILL COMPANIES LTD
NOBLE AFFILIATES INC
BAXTER INTERNATIONAL
AON CORP
DPL INC
SEARS ROEBUCK & CO
FEDEX CORP
KELLOGG CO
BOSTON SCIENTIFIC CORP
UNION CARBIDE CORP NEW
CLOROX CO
MCDONALD S CORP
DARDEN RESTAURANTS INC
D & K HEALTHCARE RESOURCES INC
UNIVERSAL HEALTH SERVICES INC
UGI CORP PA
LEGGETT & PLATT INC
V F CORP
INTERNATIONAL PAPER CO
MGM MIRAGE
MEAD CORP
GENERAL MOTORS CORP
AVON PRODUCTS INC
FORD MOTOR CO
AUTOZONE INC
QUEST DIAGNOSTICS INC
STORAGE TECHNOLOGY CORP
MINNESOTA MINING & MANUFACTURING CO
ST PAUL COS INC
ROHM & HAAS CO
GOLDMAN SACHS GROUP INC
GANNETTSCIENCE
CO INC APPLICATIONS INTERNATIONAL
ESTEE LAUDER COS INC
WALT DISNEY CO NEW
MOTOROLA INC
U S BANCORP DE
WASTE MANAGEMENT INC NEW
HARMAN INTERNATIONAL INDUSTRIES INC
DANA CORP
MICROSOFT CORP
ALLSTATE CORP
ELECTRONIC DATA SYSTEMS CORP
HARLEY DAVIDSON INC
POTOMAC ELECTRIC POWER CO
AMERICA WEST HOLDINGS CORP
CDI CORP
USG CORP
CONEXANT SYSTEMS INC
PEPSIAMERICAS INC NEW
FEDERATED DEPARTMENT STORES INC NEW
GENERAL ELECTRIC CO
ASHLAND INC
PACTIV CORPORACLE CORP DE
STRYKER CORP
PEPSI
BOTTLING GROUP INC
THOMAS & BETTS
CORP
GPU INC
CITIGROUP INC
SERVICEMASTER CO
PHELPS DODGE CORP
PEPSICO INC
W R BERKLEY CORP
HAWAIIAN ELECTRIC INDUSTRIES INC
AMERICAN STANDARD COS INC
PUBLIC SERVICE ENTERPRISE GROUP INCUSEC INC
LEXMARK INTERNATIONAL INC
EXELON CORP
SNAP ON INC
WEYERHAEUSER CO
ARMSTRONG WORLD INDUSTRIES INC
EMERSON ELECTRIC CO
KMART CORP
TEXTRON INC
VIACOM INC
HONEYWELL INTERNATIONAL INC
XEROX CORP
PNC FINANCIAL SERVICES GROUP INC
J C PENNEY CO INC
CHUBB CORP
PHILIP MORRIS COS INC
TEMPLE INLAND INC
EASTMAN KODAK CO
KB HOME
DYNCORP
KELLWOOD CO
RADIOSHACK CORP
BRIGHTPOINT INC
BRM HOLDINGS INC
UNITED TECHNOLOGIES CORP
CVS CORP
PFIZER INC
FLEETBOSTON FINANCIAL CORP
PETSMART INC
HARCOURT GENERAL INC
IMC GLOBAL INC
CLEAR CHANNEL COMMUNICATIONS INC
CONVERGYS CORP
TARGET CORP
HOUSEHOLD INTERNATIONAL
CSX CORP INC
CUMMINS INC
STAPLES INC
CONTINENTAL AIRLINES INC
STANLEY WORKS
W R GRACE & CO NEW
WALTER INDUSTRIES INC
TRICON GLOBAL RESTAURANTS INC
DOW JONES & CO INC
NORTHERN TRUST CORP
E I DU PONT DE NEMOURS & CO
COMCAST CORP
WASHINGTON MUTUAL INC
FINOVA GROUP INC
WALGREEN CO
CAMPBELL SOUP CO
HERSHEY FOODS CORP
AIR PRODUCTS & CHEMICALS INC
INGRAM MICRO INC
HERMAN MILLER INC
AETNA INC PA
EXXON MOBIL CORP
NEWMONT MINING CORPHOME DEPOT INC
ALCOA INC
AT&T CORP
JOHN HANCOCK FINANCIAL SERVICES INC
LEHMAN BROTHERS HOLDINGS INC
AES CORP
INTERNATIONAL FLAVORS & FRAGRANCES
AUTOLIV INC
ARROW ELECTRONICS INC
GRANITE CONSTRUCTION INC
CRANE CO
AMERISOURCE HEALTH CORP
CONSTELLATION ENERGY GROUP INC
ILLINOIS TOOL WORKS INC
WAL MART STORES INC
SOLUTIA INC
HORMEL FOODS CORP
LIMITED INC
TECUMSEH PRODUCTS CO
STANCORP FINANCIAL GROUP INC
STARBUCKS CORP
TRANS WORLD AIRLINES INC
MERITOR AUTOMOTIVE INC
UNUMPROVIDENT CORP
CABOT CORP
NEW YORK TIMES CO
WISCONSIN ENERGY CORP
RYERSON TULL INC NEW
CHARMING SHOPPES INC
TEKTRONIX INC
LOUISIANA PACIFIC CORP
IBP INC
TENNECO AUTOMOTIVE INC
THERMO ELECTRON CORP
MDU RESOURCES GROUP INC
BAKER HUGHES INC
MONY GROUP INC
PITNEY BOWES INC
JOHNSON CONTROLS
INCCORP
SPRINT
ECOLAB INC
TRIBUNE CO
PHARMACIA CORP DE
CINTAS CORP
SAKS INC
KOHL S CORP
COUNTRYWIDE CREDIT INDUSTRIES INC
ZIONS BANCORPORATION
TRANSMONTAIGNE INC
COMFORT SYSTEMS USA INC
POLO RALPH LAUREN CORP
MODIS PROFESSIONAL SERVICES INC
RAYTHEON CO NEW
BRIGGS & STRATTON CORP
RUSSELL CORP
UNITED RENTALS INC NEW
CADENCE DESIGN SYSTEMS INC
OHIO CASUALTY CORP
USFREIGHTWAYS CORP
NCR CORP
SERVICE MERCHANDISE CO INC
SHOPKO STORES INC
GREY GLOBAL GROUP INC
EQUITABLE RESOURCES INC
AMERICAN HOME PRODUCTS CORP
GENTIVA HEALTH SERVICES INC
CORNING INC
SCI SYSTEMS INC
ALLMERICA FINANCIAL CORP
NEWPORT NEWS SHIPBUILDING INC
JO ANN STORES INC
CERIDIAN CORP NEW
MAYTAG CORP
POLAROID CORP
NORDSTROM INC
ADVANTICA RESTAURANT GROUP INC
XCEL ENERGY INC
DEERE & CO
WILLIAMS COMPANIES
INC CHEMICAL CO
EASTMAN
WALLACE COMPUTER SERVICES INC
CMS ENERGY CORP
NEIMAN MARCUS GROUP INC
KLA TENCOR CORP
IMS HEALTH INC
HUBBELLCOLLINS
INC
& AIKMAN CORP NEW
LYONDELL CHEMICAL CO
COMERICA INC
ON SEMICONDUCTOR CORP
SEQUA CORP
BIG LOTS INC
GRAND UNION CO
MCCORMICK & CO INC
TECO ENERGY INC
WELLPOINT HEALTH NETWORKS INC NEW
READER S DIGEST ASSOCIATION INC
FEDERAL MOGUL CORP
CINERGY CORP
JOY GLOBAL INC
CBRL GROUP INC
COMMERCIAL METALS CO
LENNOX INTERNATIONAL INC
ALLEGHENY ENERGY INC
3COM CORP
R R DONNELLEY & SONS CO
WELLS FARGO & CO NEW
AVNET INC
KINDRED HEALTHCARE INC
SAFECO
HARRAH S ENTERTAINMENT
INCCORP
FIFTH THIRD BANCORP
CLAYTON HOMES INC
OSHKOSH TRUCK CORP
HALLIBURTON CO
SEALED AIR CORPAMGEN
NEW INC
DELPHI AUTOMOTIVE SYSTEMS CORP
J B HUNT TRANSPORT SERVICES
RELIANT
INC
ENERGY INC
DEL MONTE FOODS CO
QUESTAR CORP
INDUSTRIES INC
STARWOOD HOTELS & RESORTSPPG
WORLDWIDE
WGL HOLDINGS INC
NSTAR
ENCOMPASS SERVICES CORP
PROGRESS ENERGY INC
NORTHWEST AIRLINES CORP NEW
DEAN FOODS CO
TRUE NORTH COMMUNICATIONS INC
SEMPRA ENERGY
USA NETWORKS INC
ENRON CORP OR
LOCKHEED MARTIN CORP
BETHLEHEM STEEL CORP
LTV CORP
FIRSTENERGY CORP
PHILLIPS PETROLEUM CO
SUN MICROSYSTEMS INC
BRINKER INTERNATIONAL INC
RELIANCE
GROUP CO
HOLDINGS INC
GILLETTE
ENERGIZER HOLDINGS INC
TXU CORP
ALLERGAN INC
COMPUTER SCIENCES CORP
VIAD CORP
GENUINE PARTS CO
OFFICE DEPOT INC
AMAZON COM INC
CHEVRONTEXACO CORP
FISHER SCIENTIFIC INTERNATIONAL INC
METALS USA INC
UNITED PARCEL SERVICE INC
CISCO SYSTEMS INC
COMPAQ COMPUTER CORP
ELI LILLY & CO
GAP INC
PETER KIEWIT SONS INC NEW
WEATHERFORD INTERNATIONAL INC NEW
CONSOLIDATED EDISON INC
SYNOVUS FINANCIAL CORP
SODEXHO MARRIOTT SERVICES INCLOEWS CORP
NISOURCE INC
CONAGRA FOODS INC
TORCHMARK CORP
TRANS WORLD ENTERTAINMENT CORP
WACKENHUT CORP
REPUBLIC SERVICES INC
RAYONIER INC
NIKE INC
CB RICHARD ELLIS SERVICES INC
ALLTEL CORP
AMERICAN GENERAL CORP
URS CORP
YORK INTERNATIONAL CORP
ULTRAMAR DIAMOND SHAMROCK CORP
FIRST DATA CORP
INTEL CORP
CHARTER ONE FINANCIAL INC
BURLINGTON INDUSTRIES INC
ELECTRONIC ARTS INC
CORN PRODUCTS INTERNATIONAL INC
PHILLIPS VAN HEUSEN CORP
PENNZOIL QUAKER STATE CO
FERRO CORP
OAKWOOD HOMES CORP
CARLISLE COMPANIES INC
BROWN SHOE CO INC
GOLDEN STATE BANCORP INC
HON INDUSTRIES INC
IKON OFFICE SOLUTIONS INC
ARCHER DANIELS MIDLAND CO
HILTON HOTELS CORP
BEVERLY ENTERPRISES INC NEW
AMERICAN FINANCIAL GROUP INC NEW
APPLIED INDUSTRIAL TECHNOLOGIES INC
EXPRESS SCRIPTS INC
CONSOLIDATED FREIGHTWAYS CORP
CONSECO INC
AVERY DENNISON CORP
FIRST AMERICAN CORP
PRECISION CASTPARTS CORP
BORGWARNER INC
BECKMAN COULTER INC
RPM INC
DOLLAR TREE STORES INC
BALL CORP
R J REYNOLDS TOBACCO HOLDINGS INC
IMPERIAL SUGAR CO TX
BERKSHIRE HATHAWAY INC NEW
TOYS R US INC NEW
RUDDICK CORP
AMERICAN MANAGEMENT
NEXTEL
SYSTEMS
COMMUNICATIONS
INC
INC NEW
COOPER TIRE & RUBBER CO
DST SYSTEMS INC
BANKNORTH GROUP INC ME
CAREMARK RX INC
ANADARKO PETROLEUM CORP
AFLAC INC
PROTECTIVE LIFE CORP
NUCOR CORP
ROCK TENN CO
UST INC
GROUP 1 AUTOMOTIVE INC
ADELPHIA COMMUNICATIONS CORP
OFFICEMAX INC
BROWN FORMAN CORP
STANDARD PACIFIC CORP
CHIQUITA BRANDS INTERNATIONAL INC
FREEPORT MCMORAN COPPER & GOLD INC
MILLENNIUM CHEMICALS INC
COMDISCO INC
L 3 COMMUNICATIONS HOLDINGS INC BURLINGTON RESOURCES INC
E TRADE
GROUP INC
LABORATORY CORP OF AMERICA
HOLDINGS
FRANKLIN RESOURCES INC
PARK PLACE ENTERTAINMENT CORP
WENDY S INTERNATIONAL INC
NORTHWESTERN CORP
TENET HEALTHCARE CORP
DELUXE CORP
HEWLETT PACKARD CO
CRESTLINE CAPITAL CORP
CHARTER COMMUNICATIONS INC DE
BELK INC
BOWATER INC
ZALE CORP
JEFFERSON PILOT CORP
PENN TRAFFIC CO
HEALTH MANAGEMENT ASSOCIATES INC
QUALCOMM INC
APPLIED MATERIALS INC
JACK IN THE BOX INC DE
PIER 1 IMPORTS INC
CKE RESTAURANTS INC
ASTORIA FINANCIAL CORP
FLEETWOOD ENTERPRISES INC
CROWN CORK & SEAL CO INC
SCANA CORP
DANAHER CORP
FIDELITY NATIONAL FINANCIAL INC
EXIDE TECHNOLOGIES
GUIDANT CORP
HOUSE2HOME INC
WILLIAMS SONOMA INC
BARNES & NOBLE INC
WABASH NATIONAL CORP
HARSCO CORP
ADC TELECOMMUNICATIONS INC
TEREX CORP
DOLE FOOD CO INC
MARTIN MARIETTA MATERIALS INC
SOLECTRON CORP
BJ S WHOLESALE CLUB INC
APACHE CORP
LANDS END INC
COMPUTER ASSOCIATES INTERNATIONAL I
WORTHINGTON INDUSTRIES INC
CNF INC
NORTHEAST UTILITIES
COSTCO WHOLESALE CORP DE
HUGHES SUPPLY INC
CAPITAL ONE FINANCIAL CORP
TEXAS INDUSTRIES INC
CDW COMPUTER CENTERS INC
PIONEER STANDARD ELECTRONICS INC
COMPUWARE CORP
PACIFICARE HEALTH SYSTEMS INC NEW
TOWER AUTOMOTIVE INC
SYMBOL TECHNOLOGIES INC
FISERV INC
MICHAELS STORES INC
RENT A CENTER INC NEW
PEOPLES ENERGY CORP
SOUTHWEST AIRLINES CO
DILLARD S INC
AMKOR TECHNOLOGY INC
SPHERION CORP
PPL CORP
BANK UNITED CORP
DURA AUTOMOTIVE SYSTEMS INC
SPX CORP
SEABOARD CORP
EXPEDITORS INTERNATIONAL OF WASH IN
MAXTOR CORP
MASTEC INC
POTLATCH CORP
NABORS INDUSTRIES INC
BJ SERVICES CO
COOPER CAMERON CORP
21
22
JP Morgan Chase board, 2001
…with banks sitting somewhere in the middle
JP Morgan Chase
Bank of America
Citigroup
23
24
By 2011, only one director served on 5+ boards in the S&P 500,
and the “inner circle” was now called “overworked directors”
Who were the top 5 inner circle directors?
Source: Forbes (2002)
26
Mean Geodesic
No longer such a small world after all
5
4.8
4.6
4.4
4.2
4
3.8
3.6
3.4
3.2
3
S&P 1500
4. Corporations aim to grow bigger
in assets and number of
employees
S&P 500
Year
27
28
Increased ownership by institutions has corresponded
to increased devotion to “shareholder value”…
…and an orientation to share price has induced
massive restructuring favoring the “Nike model”
“We exist to create value for our share owners on a
long-term basis by building a business that
enhances The Coca-Cola Company's
trademarks.”
“Wall Street can wipe you out. They are the
rule-setters. They do have their fads, but to a
large extent there is an evolution in how they
judge companies, and they have decided to
give premiums to companies that harbor the
most profits for the least assets.”
“Sara Lee Corporation's mission is to build
leadership brands in consumer packaged goods
markets around the world. Our primary purpose is
to create long-term stockholder value.”
John Bryan, CEO, explaining Sara Lee’s
“de-verticalization” program
29
30
Corporation ≠ organization: no fixed boundaries
Vizio now has the
largest market
share of LCD
televisions in the
US (22%)—with
196 employees
The US economy is at an advanced
stage of Nike-fication
31
32
Corporation ≠ organization: no fixed identity
Corporation ≠ organization: no fixed industry
Poisonous pet chow
containing melamine from
China was made by an
Ontario-based
manufacturer but sold
under dozens of different
US brand names.
What is a “bank”?
?
The global OEM model is
not just for Nike anymore.
?
?
?
33
Corporation ≠ organization: no fixed nationality
34
?
Corporation ≠ organization: no employees
“Hermit crab
organizations”
maintain the
brand but lose
the people
(e.g., Circuit
City’s 43,000
employees)
35
36
Spinoffs, layoffs, and outsourcing have shrunk the
largest US corporations
% employed by top 25 firms
10
9
8
5. Corporations live a long time
7
6
5
4
3
Source: Bureau of Labor Statistics; Compustat Annual Industrials
37
38
About those dominant corporations…
Allied Chemical
Eastman Kodak
Owens-Illinois Glass
Alcoa
Exxon
Procter & Gamble
American Can
GE
Sears Roebuck
AT&T
General Foods
Swift & Co
American Tobacco
GM
Texaco
Anaconda Copper
Goodyear
Union Carbide
Bethlehem Steel
International Harvester
United Technologies
Chevron
International Nickel
U.S. Steel
Chrysler
International Paper
Westinghouse Electric
Du Pont
Johns-Manville
Woolworth
= gone by 2009
= really “SBC”
40
Some premises of the corporate-centered society
The “going public” fad of the 1990s is long gone
IPOs per year in the US
1.
2.
3.
4.
The typical corporation makes tangible products
Corporate ownership is broadly dispersed
Corporate control is concentrated
Corporations aim to grow bigger in assets and
number of employees
5. Corporations live a long time
800
700
600
500
400
300
200
100
0
Source: Jay Ritter, University of Florida
41
As a result, the number of public corporations in the US
has dropped by over half since 1997
42
And the companies going public today ignore basic
standards of corporate governance
Source: World Bank World Development Indicators 2011
43
44
How-to guide for an instant startup, ca. 2012
• Product: iPhone “remote drone assassin”
• Target market: neo-mercenary firms
45
1. Rent a desk in a shared office
2. Incorporate online in Liberia for $713.50
3. Crowdsource the funding at Kickstarter
4. Hire programmers for the app at oDesk
5. Find a Chinese drone vendor at Alibaba.com
6. Set up a payment system at Squaredup
Conclusion
7. Get it shipped from the dock to our customers
The public corporation in the US is now
unnecessary for production, unsuited for
stable employment and the provision of social
welfare services, and incapable of providing a
reliable long-term return on investment
54
g{tÇ~ çÉâ4
55