This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kraft, Cadbury Deal Shows Governance Gap

Odysseas Papadimitriou is founder and chief executive officer of Evolution Finance, the parent company of Wallet Blog and Card Hub, an online marketplace for credit cards.

NEW YORK ( TheStreet) -- In a New York Times article in November, Andrew Ross Sorkin explored the corporate governance implications of the proposed takeover of the British confectioner Cadbury (CBY) by the American company Kraft Foods (KFT). The article says the boards of British companies act as advisers, but the decision to sell is up to the shareholders.

Since the article was written, the takeover of Cadbury by Kraft has been complicated by various developments, but the issues discussed by Sorkin still hold. Sorkin used the proposed takeover as an opportunity to discuss the corporate governance differences in the U.S. and U.K.

In the British system, shareholders have more control over the future of their investments. In the American system, much of the control of the company is ceded to corporate boards, so takeovers generally require the board's blessing to move ahead.

While I applaud Sorkin for presenting both sides of the issue, the debate over whether a company ought to be controlled by its investors or its board is innately dangerous. What is really being discussed here is the viability of democracy. While Sorkin's story focuses on whether shareholders have the expertise to know how companies should be run, the broader implication is whether the average person has enough sense to be responsible for his vote.

Average people should be empowered to make decisions concerning their welfare. This includes having the ability to take a position, by voting, on issues that will affect them fiscally. This is true of national and state elections, and it should also be true for corporate decisions. Otherwise, the implication is that the average person can't be trusted to make decisions for themselves and that a "board of directors" of sorts is necessary for other decisions involving a vote.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%
YHOO $36.60 0.03%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs