Based on the 2013 book, Citizens DisUnited, by Robert A.G. Monks, this presentation looks at "ownerless" corporations and their impact on society. Companies with absentee owners typically try to amass wealth and power for CEOs while putting responsibility for things like taxes and pensions back onto society.

1. What Is A Drone Corporation?
From the new book
Citizens DisUnited:
Passive Investors, Drone
CEOs and the Capture of
the American Dream
By: Robert A.G. Monks

2. We know what military
drones are - and in my
mind there is an analogous
version in the drone
corporation.
A vehicle that has
enormous power for good
and bad, and yet insulates
its operators from all risk
either way.
What Is A Drone Corporation?

3. Drone Corporations are companies whose
ownership is so diffuse that essentially they have no
owners.
No one is accountable for their behavior
What Is A Drone Corporation?

4. The S.E.C. defines a principal owner as one holding
10% or more. We almost never see this position
anymore.
Instead we have a proliferation of ownerless or
“drone” corporations.
What Is A Drone Corporation?

5. For the book, we studied the difference between
owned and ownerless corporations - the ones I call
drones. Drones tend to…
What Is A Drone Corporation?

6. Pay their CEOs more
• In 2012, CEOs at drone corporations took home, on average
approximately $125 million more than their non-drone counterparts
• Based on average returns, drone CEOs out-earned their counterparts
by nearly 50%
AND
• The average tenure of CEOs at drone companies is more than 2 years
shorter than non-drones
• They were almost 50% more likely to be named the Chairman of the
Board in addition to being CEO
What Is A Drone Corporation?

7. Perform less well than their owned or
“non-drone” counterparts
• In 2011, total shareholder return for non-drone
corps was 6.59% v. 4.93% for drones
What Is A Drone Corporation?

8. Drones are more likely to pay fines and settlements
In regulatory and related fines and settlements paid
over the past 20 years, drone companies were more
than twice as likely to make such payments.
Since 1989, 46% of drones have paid fines
and settlements vs. 24% of non-drones.
Average fine or settlement paid per
company was $664 million for drone v. $265
million for non-drones.
What Is A Drone Corporation?

9. Drones accounted for almost
85% of the total amount of
fines & settlements paid —
more than $80 billion in all.
What Is A Drone Corporation?

10. Drone corporations are more likely to cut pension plans
Drone companies were twice as likely to have frozen or eliminated
pension plans since 2005
• 3M, Alcoa, CIGNA, GE, IBM, Kraft, Walt Disney, Verizon and
others are among the companies who froze or eliminated
company pensions
• 85,000 pension plans vanished since 1985
• 2 to 1 the Drones froze or eliminated more pensions
What Is A Drone Corporation?

11. Drones & Pensions
• In 2006, IBM eliminated its employee pension and began a
401 (k) plan instead
• It expected to save $450-$500 million in that first year
• In that same year, IBM CEO Samuel Palmisano earned
$24.46 million, up from $14.4 million in 2005
What Is A Drone Corporation?

12. Drone companies tend to pay less or no taxes
20 S&P 500 companies were identified by Citizens for Tax Justice
has having paid no U.S. taxes from 2008-2010
• 2/3 of those were drones
• 26 of the companies identified by CTJ paid no taxes in 2011
Let’s take G.E., for example…
What Is A Drone Corporation?

13. Drones & Taxes:
GE, despite making $10.5 billion in U.S. profits over the last three
years.
• Paid $0 in federal taxes
• Collected $4.7 billion in tax rebates
• Has a tax department of 975 strong to help lower its taxes – the largest
corporate tax department in the world
• Has 14 subsidiaries in low or no-tax offshore tax havens
• Spent $84 million lobbying Congress to get its special treatment
• in Federal Election Commission filings, “taxes” consistently ranks in the
top three issues on which GE reports lobbying activity
What Is A Drone Corporation?

14. Whenever possible, drone corporations push their
responsibilities onto society while rewarding the top
management with big paydays.
What Is A Drone Corporation?

15. Which companies are drone corporations?
To determine which companies were drone
corporations, we commissioned a study called, Passive
Investing and Indexed Companies.
What Is A Drone Corporation?

16. The study looked at companies in the S&P 500 and
used these filters:
• There are one or more principal shareholders, which the SEC
defines as those holding a position of 10% or more
• One or more company founders continue to play a key role in
guiding the company as either CEO or Chairman, regardless of
the size of this individual’s holdings
• Where family interests, in most cases linked to the company’s
founder, are represented by active board members,
regardless of the size of the family’s current holdings
• Where one or more known activist shareholders have taken
an active position in in the company
What Is A Drone Corporation?

17. The result was that 269 of the S&P 500 could be
called drones. The top six were:
What Is A Drone Corporation?

18. Does this study mean that non-drone or owned
corporations are always better corporate citizens?
No, but it means that there is someone – an
identifiable and accountable leader – at the helm.
Addressing the problems caused by drone
corporations is a first step toward fixing some of our
nation’s economic and political problems.
What Is A Drone Corporation?

19. www.ragm.com
What Is A Drone Corporation?
From the new book
Citizens DisUnited:
Passive Investors, Drone
CEOs and the Capture of
the American Dream
By: Robert A.G. Monks