Aug 19, 2019

CEOs are America's new politicians

Illustration: Lazaro Gamio/Axios

The Business Roundtable today made a small, symbolic but significant move: 181 of the nation’s top CEOs agreed that driving shareholder value is no longer their sole business objective. 

Why this matters: They expanded their mission beyond mere wealth creation to include everything from taking care of employees to helping their communities.

  • This shift, spearheaded by BRT Chairman and JPMorgan Chase CEO Jamie Dimon, reflects the growing pressure from employees, social media and customers to do more than increase stock prices. 

The big picture ... Truth is, even the most press-shy, introverted CEOs need to be de facto politicians, thanks to several unambiguous social trends: 

  • Millennial employees demand their employers stand for something beyond profit. 
  • It is getting harder to recruit and retain talent, especially tech talent, if profit is the only objective. 
  • A rising number of consumers make purchasing decisions based on a company's social purpose. 
  • The media applies a lot more pressure on CEOs to take positions on political topics, such as race and immigration. 
  • Every CEO/company is vulnerable to split-second, social media uprisings. Undefined CEOs and companies find it impossible to push back. 

Watch for: Mischievous shareholders could use this BRT document, which was first reported by Fortune's Alan Murray, to accuse CEOs of worrying about things beyond increasing the value of their shares, a fiduciary responsibility.

  • I hear several general counsels cringed — and protested — when they saw this document. 

Interesting historical note: A half decade ago, Steven Pearlstein, who won a Pulitzer for his WashPost columns on the economy, partly blamed the BRT’s focus on shareholder value alone for the corruption of capitalism.

Tuck away … The BRT members that didn't sign the new document: Alcoa, Blackstone, GE, Kaiser Permanente, NextEra, Parker Hannifin and State Farm.

Read the BRT's full text and see the CEOs that signed on:

Go deeper: The issues haunting CEOs during the Trump era

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Podcast: American CEOs refocus their priorities

The Business Roundtable, a group of nearly 200 American CEOs, today changed its 22-year-old mission statement about how management's paramount responsibility is to shareholders. The new one includes a commitment to all stakeholders — including employees, suppliers, local communities and customers. Dan digs in with Fortune Magazine's Alan Murray.

Go deeper: CEOs are America's new politicians

Keep ReadingArrowAug 19, 2019

Corporate America's changed mission isn't without its critics

Illustration: Lazaro Gamio/Axios

Monday was all about the warm fuzzies in Corporate America, after Business Roundtable changed its mission statement to acknowledge that companies have obligations to all stakeholders, not just those with stock certificates.

However, the adulation wasn't universal. Several business bigs want to know what happens when interests of various stakeholders come into conflict. If fiduciary duty to owners is no longer primary, what drives final decisions?

Go deeperArrowAug 20, 2019

New research encourages CEOs to act on guns

Rebeccca Zisser/Axios

The majority of U.S. adults in a new poll by Edelman Intelligence would feel more favorably toward a company whose CEO backs tougher background checks for gun purchases.

Why it matters: CEOs traditionally were reluctant to wade into polarizing issues, but they face pressure from shareholders, employees and customers to show their values.

Go deeperArrowSep 5, 2019