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Nearly 200 CEOs Say Maximizing Shareholder Value Is No Longer Paramount


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#1 LFC

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Posted 19 August 2019 - 08:05 PM

Real or just a PR stunt? Only time will tell. Quoting Jamie Dimon doesn't exactly add to any urge to give them the benefit of the doubt.

Quote

Shareholder value is no longer the main focus of some of America’s top business leaders.

The Business Roundtable, a group of chief executive officers from major U.S. corporations, issued a statement Monday with a new definition of the “purpose of a corporation.”

The reimagined idea of a corporation drops the age-old notion that corporations function first and foremost to serve their shareholders and maximize profits. Rather, investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities are now at the forefront of American business goals, according to the statement.

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” said the statement signed by 181 CEOs. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

The conscience of Wall Street has been at the forefront of American business and politics recently as issues about economic equality and fair business practices dominate the 2020 election stage and the overall news cycle.

The Business Roundtable, founded in 1972, has put out many statements on the principles of corporate governance since the late 1970s. It said this new definition “supersedes” past statements and outlines a “modern standard for corporate responsibility.”

“The American dream is alive, but fraying,” Jamie Dimon, chairman and CEO of J.P. Morgan Chase and chairman of Business Roundtable, said in a press release.

Along with Dimon, the statement received signatures from chiefs including Amazon’s Jeff Bezos, Apple’s Tim Cook, Bank of America’s Brian Moynihan, Dennis A. Muilenburg of Boeing and GM’s Mary Barra.

“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” said Dimon.

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#2 AnBr

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Posted 19 August 2019 - 08:38 PM

I'll believe it when I see it.
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#3 baw1064

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Posted 22 August 2019 - 08:18 PM

Where does "maximizing our compensation" fall in the priorities list?
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#4 LFC

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Posted 23 August 2019 - 10:26 AM

View Postbaw1064, on 22 August 2019 - 08:18 PM, said:

Where does "maximizing our compensation" fall in the priorities list?

They managed to align "maximize shareholder value" and "maximize our compensation" by compensating themselves with gobs of stock. I'm sure they're up to the challenge of milking this system as well.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#5 Beelzebuddy

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Posted 23 August 2019 - 10:40 AM

To put their money where their mouth is; they should tie CEO pay to multiples of the lowest pay in the company. What multiple though?
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#6 LFC

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Posted 23 August 2019 - 12:23 PM

View PostBeelzebuddy, on 23 August 2019 - 10:40 AM, said:

To put their money where their mouth is; they should tie CEO pay to multiples of the lowest pay in the company. What multiple though?

Doesn't matter as long as it's fractional.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#7 D. C. Sessions

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Posted 23 August 2019 - 01:06 PM

View PostBeelzebuddy, on 23 August 2019 - 10:40 AM, said:

To put their money where their mouth is; they should tie CEO pay to multiples of the lowest pay in the company. What multiple though?

Oh, pick a number. Five or ten would be OK.

Then the Company cuts staff to the C-Suite and contracts out the rest.
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#8 LFC

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Posted 26 August 2019 - 12:53 PM

Barry Ritholtz discusses the fact that the CEOs supposedly talking about this have a pretty shitty record of doing anything about it. I don't see anybody giving it credence. As the old saying goes, "money talks, bullshit walks."

Quote

For 47 years, the Business Roundtable has lobbied on behalf of corporate America. Much of that time, it maintained the fiction that the sole purpose of a corporation was to maximize profits on behalf of shareholders. This philosophy has been under assault for several years now, and this week the Business Roundtable announced it wants to put it to rest.
In a widely circulated memo, the 200-member organization reversed itself, writing that “shareholder primacy” is no longer the sole purpose of a corporation. Instead, corporations must include a commitment to “all stakeholders,” which includes customers, employees, suppliers and local communities.

Some kudos are in order for JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, and chairman of the Business Roundtable, for driving these changes. He has been discussing the need for a more inclusive form of capitalism, both in public speeches and in his letters to shareholders, for some time.

But turning this aircraft carrier around won’t be easy, in large part because of the group’s own history. Indeed, the Roundtable has spent most of the past four decades advocating against the interests of those exact stakeholders. To cite some of the more notable examples:

— It fought the rise of labor unions and pro-union legislation;

— Helped to defeat antitrust bills;

— Prevented the formation of the Consumer Protection Agency;

— Opposed corporate governance changes to make boards of directors and CEOs more accountable to stockholders;

— Fought proper accounting of stock options given as compensation to executives and insiders;

— Opposed increases in the national minimum wage (it now favors increases);

— Lobbied to prevent restrictions on executive compensation;

— Fought legislation that would create cleaner energy and address climate change;

— Pushed for corporate income-tax cuts;

— Supported anti-consumer Supreme Court decisions, including the fiction that corporations are legal people, and that campaign donations equal speech.

The Roundtable might respond that this is all in the past. Let’s hope so. But the organization has an even greater challenge: Scan the list of 181 signatories to the recent memo and it’s a Who’s Who of corporate behavior that has burdened and disadvantaged the very stakeholders they will now champion.

Consider a few of the signatories:

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer





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