Corporate America is focusing too much on getting shareholders rich, so the federal government needs to intervene to hold businesses accountable, Sen. Elizabeth Warren told CNBC on Wednesday.
To that end, the Massachusetts Democrat introduced legislation, the Accountable Capitalism Act, which would require corporations with more than $1 billion in annual revenue to obtain a federal charter.
That charter would obligate company directors to consider the interest of all stakeholders, like employees and those in the community where the company is based, and not just those who own the stock. While charters, which define the obligations and structure of American companies, are done at the state level, Warren's bill brings it to the federal level.
"Let's change the compensation structure for the CEOs to say that the CEOs will not be permitted to juice the [stock] price, and then once they juice the price, make a quick sale, make a bazillion dollars, and keep emphasizing the incentives," she said in the interview, part of which aired on "Power Lunch."
Warren initially put forth her plan in an op-ed in The Wall Street Journal. She pointed to a shift in corporate behavior from focusing on shareholders, employees and other priorities to focusing mostly just on those who own the stock.
"Before 'shareholder value maximization' ideology took hold, wages and productivity grew at roughly the same rate. But since the early 1980s, real wages have stagnated even as productivity has continued to rise. Workers aren't getting what they've earned," she wrote.
In fact, between 2007 and 2016, large U.S. corporations dedicated 93 percent of their earnings to shareholders, she said.
It's a trend that will apparently continue. According to a recent analysis by Goldman Sachs, U.S. companies are poised to reach a record $1 trillion in share buybacks this year.
Sen. Warren also criticized U.S. trade policies that serve corporate interests over workers.