How to fine a corporation appropriately? [View all]

[dickthegrouch]

This fiasco over the Pacific Gas and Electric utility (PG&E) recouping the money from rate payers to pay for the fines due to the deaths of 8 people and destruction of 38 homes on Sep 10 2010, is really getting me pissed.

I was wondering how to make a corporation *really* pay attention.

The owners of the corporation are its shareholders and the board of directors is just a proxy for those shareholders. If the Board of Directors misappropriates company money in the form of bonuses and dividends when it has not performed due diligence in maintaining its capital, they are guilty just as any other thief. However the shareholders should be the ones to pay ultimately, since they are the corporations owners.

I think the appropriate way to force the owners to pay, is for the court to direct that common shares be sold to pay any fines and to make good on the unmaintained infrastructure that the owners already own. This has the added advantage of diluting the owner's equity (because new shares have been released) and making every owner feel the pain of the mismanagement and misappropriation as should have happened in the first place. Let the owners (shareholders) sue the Directors for any recovery they think appropriate because of the reduction in their equity value.

There ought to be a law!