Business Roundtable Redefines the Purpose of a Corp to Promote ‘An Economy That Serves All Americans

msf

Updated Statement Moves Away from Shareholder Primacy, Includes Commitment to All Stakeholders

“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

Emphasis in original. The statement (most of which appears below) was signed by 181 CEOs.

(Press Release) https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

Statement on the Purpose of a Corporation: https://opportunity.businessroundtable.org/wp-content/uploads/2019/08/Business-Roundtable-Statement-on-the-Purpose-of-a-Corporation-with-Signatures.pdf

We commit to:

• Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
• Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
• Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
• Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
• Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country

sfnative

Take that Milton Friedman.

davidrmoran

christ, what comedy, like saul on the road to damascus

as if this could not have happened prior, or even been imagined

'if'n you're that baby's daddy, where you been at??' (simpsons)

Old_Joe

Yes, I did read that earlier. I'll believe it when I see it happen. It sounds like one of those lofty mission statements that executives love to have, but that absolutely no one in their organization even thinks about. (Unless after a drink or two they're maybe laughing about the whole thing.)

Old_Joe

I guess they didn't sign that letter...

Current WSJ Headline & Article excerpt:

Viacom and CBS Executives to Earn Big Bucks in Merger Deal

The merger of Viacom Inc. and CBS Corp. will be lucrative for the top executives of both companies.

Viacom Chief Executive Bob Bakish, who will become president and CEO of the combined company, ViacomCBS, has signed a new contract ending four years after the deal closes. The contract lists salary, bonuses and other incentives worth about $31 million a year, roughly 55% higher than Mr. Bakish’s total compensation in the most recent fiscal year, the company said in a securities filing.

Acting CBS Chief Executive Joe Ianniello, who will be chairman and CEO of CBS at ViacomCBS reporting to Mr. Bakish, will receive a payout of about $70 million when the deal closes. That payment resulted from a provision in his old contract at CBS that entitled him to a lump sum if he wasn’t named CEO of the combined company in the event of a merger.

msf

No they didn't sign on. (The pdf letter is searchable, so it's easy to check for a particular name or company.)

Andrew Ross Sorkin has an interesting column about this shift (real or not), with somewhat an historical perspective:
https://www.nytimes.com/2019/08/20/business/dealbook/business-roundtable-corporate-responsibility.html

Old_Joe

One picture is worth...

Viacom Chief Executive Bob Bakish

Old_Joe

@msf- What a surprise. Good ol' Milton Friedman and the University of Chicago, yet again.

Yes, an interesting commentary. Thanks for that.