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Statement on the Purpose of a Corporation

businessroundtable.org

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Re: Statement on the Purpose of a Corporation

#51

Post by JustSomeNobody »

wiremine wrote: post #23

You can be cynical about this, and a healthy amount of skepticism is warranted given the authorship. That said, it would be interesting (healthy?) to discuss/debate the merits of the actual statements: * 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 f…

> Investing in our employees. This starts with compensating them fairly and providing important benefits.

Every CEO who signed this was nodding, thinking, "we do that already."

Re: Statement on the Purpose of a Corporation

#52

Post by mempko »

excursionist wrote: post #47
mempko wrote: post #27

People are misunderstanding the purpose of this statement. Everyone is saying it doesn't have legal teeth. This is true. But that's not the point. The point of this statement is to signal to the public, that the wealthy are ready to give them what they want and understand that the inequality is unsustainable. They are prepared to make concessions now and it's up to the public to take them. IMO This is basically a "Go…

I think you are misunderstanding the purpose of this cheap PR move.

It is a PR move. I'm stating why they are making the PR move. Why even make the PR move if everything is fine? Why rock the boat if all is well?

Re: Statement on the Purpose of a Corporation

#53

Post by throwaway2048 »

mlyle wrote: post #37
AtlasBarfed wrote: post #13

Wake me up when I can use such a statement as a means to legally coerce corporations into compliance with existing laws, to say nothing of the exigent environmental threats facing the world. Literally every CEO would laugh at this statement in the privacy of their office, while they engineer stock manipulation to trigger their stock options and retire in 5 years. It's like an ethics in business class at MBA schools.…

"Literally every". I don't think it's fair to tar every business owner and executive with this brush. Yes, there's unethical people, and it's way too common in this business environment. But there's also plenty of businesses that do their very best to treat customers, employees, suppliers, and shareholders with respect and fairness.

The issue is the more prevalent this stuff becomes, the more the bad drives out the good. Its the same argument about corrupt police departments, all the good cops either leave, or are forced out by their corrupt co-workers.

Re: Statement on the Purpose of a Corporation

#54

Post by skybrian »

n-exploit wrote: post #6

If corporations want to make a real change and provide value to all stakeholders, they will need to develop a practice to systematically eliminate all negative externalities (risk) being transferred to society. Unfortunately, the current regulatory environment still makes this illegal/impossible, given that executives are still legally bound to create value for shareholders. The thoughts and feelings of these CEOs me…

This supposed legal requirement is a myth. Managers have a lot of leeway in how to justify their decisions as somehow related to corporate interests. The company lawyers are not going around warning managers that if they don't pursue shareholder value, they are putting the company at legal risk. It's not something regulators care about. Company training courses warn employees not to do various illegal things that could get the company in trouble, but failure to pursue shareholder value isn't one of them. (The closest thing might be spending corporate funds on yourself instead of legitimate business expenses.)

The pursuit of shareholder value is more of a cultural norm. Top management and many employees have stock or stock options, so naturally everyone is happy when the stock goes up. Increasing revenues and profits are almost always rewarded. This is all justified as aligning employees' interests with shareholder value.

The article shows that some companies might be moving away from this a little bit. In practice, employees are people who can be motivated by beliefs other than what personally benefits them, and the statement provides a bit of philosophical cover for that. But I expect that growth will continue to be considered good.

Re: Statement on the Purpose of a Corporation

#55

Post by kolbe »

This is a wonderful opportunity for entrepreneurs.

While Larry Fink pushes his social agenda on the companies he controls, leaders of private companies, whose stock is largely owned by investors with "skin in the game," will flourish.

Re: Statement on the Purpose of a Corporation

#56

Post by vasilipupkin »

wiremine wrote: post #23

You can be cynical about this, and a healthy amount of skepticism is warranted given the authorship. That said, it would be interesting (healthy?) to discuss/debate the merits of the actual statements: * 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 f…

Soviet Union had show trials and U.S. has show letters. The legal purpose of a corporation is to generate returns for shareholders. If training employees and helping customers advances that goal, then corporations should do it. Otherwise - no. Goes without saying that corporations should maximize shareholder value using legal means only.

Re: Statement on the Purpose of a Corporation

#57

Post by excursionist »

mempko wrote: post #52
excursionist wrote: post #47

Earlier quoted context omitted.

I think you are misunderstanding the purpose of this cheap PR move.

It is a PR move. I'm stating why they are making the PR move. Why even make the PR move if everything is fine? Why rock the boat if all is well?

What? Corporations have always been spending time & money on PR. Are you asking what the purpose of PR is? I see no reason to assume altruistic motives are involved.

Re: Statement on the Purpose of a Corporation

#58

Post by throwaway2048 »

cs702 wrote: post #17

This new purpose stated by the CEOs of America's largest corporations is a welcome change to the corporate ethos that has prevailed in the US since the "greed is good" days of the 1980's. It is also a preemptive response to the growing popularity of politicians like Bernie Sanders and Elizabeth Warren.

Its feelgood window dressing, with no concrete goals, completely meaningless and subjective statements of value, no plan of action, and zero commitments.

Its precisely engineered to make you think the issues it appears to be talking about are being acknowledged and addressed, when in reality, they are going to be completely ignored, then when, and if, it is brought up as criticism, it can be completely deflected from because the things it says are so totally subjective.

This is 100% PR bullshit designed to mislead you like this.

If they wanted to be better, corporations could start today, right now, and skip the worthless ceremony.

Re: Statement on the Purpose of a Corporation

#59

Post by generaljelly »

FabHK wrote: post #16
n-exploit wrote: post #6

If corporations want to make a real change and provide value to all stakeholders, they will need to develop a practice to systematically eliminate all negative externalities (risk) being transferred to society. Unfortunately, the current regulatory environment still makes this illegal/impossible, given that executives are still legally bound to create value for shareholders. The thoughts and feelings of these CEOs me…

The thoughts and feelings of these CEOs mean a lot, because I am pretty sure that the current regulatory environment underdetermines the choices a corporation has (otherwise it would be General Councel and Compliance that runs companies). So, CEOs can take externalities into account when making decisions within the legally feasible.

They don't. Some San Francisco new hires for JPMorgan get paid $86,000. This is criminally underpaid. Action matters. First hand source here.
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