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?

  • "You'd think some of these for-profit companies would have also announced that they're converting into public benefit corps, but they didn't," one naysayer offered.
  • Another added: "The mistake I think they made was suggesting that decisions will be made for the purpose of benefiting all stakeholders, rather than saying that they do positive things for employees and local communities because it enhances shareholder value in the long term. You can save a buck today by shortchanging customers, for example, but you're also shortchanging your long-term investors."

There also were worries that stakeholders could use the Business Roundtable statement in litigation.

  • "Class action lawyers are going to love this the next time one of these companies do layoffs or move a factory. Unless the company is bankrupt, how can they justify those actions if employees and local communities are on par with shareholders?"
  • "I don't see this actually happening, but what if one of these companies sells to a lower bidder because they think it's a better fit for employees? If it's a penny less per share, fine. But if it's $5? Delaware law is pretty clear on that."

The backdrop:

  • 181 CEOs said their companies have a "fundamental commitment" to employees, suppliers, customers, local communities, and the environment.
  • Eight members didn't sign. Two, State Farm and Kaiser Permanente, said it was because they don't have shareholders. None of the others gave comment.
  • Fortune's Alan Murray said on the Pro Rata Podcast that it is partially driven by CEO fears that free-market capitalism is under assault, and that companies must reframe their own narratives before it's too late.

Our thought bubble: If you've ever been involved in drafting a mission statement, you know how complicated it can be. And that goes double if you're changing an old one. There are good-faith arguments over specific words and how sentences are structured, with everyone trying to strike the proper balance of aspiration, realism, and flexibility.

  • In this case, the CEOs may not have realized that their moral GPS was driving them into a ditch. But if they prove unable to successfully negotiate with all stakeholders — if they must lean on their fiduciary crutch — then perhaps they shouldn't be CEOs in the first place.

Go deeper: Business Roundtable survey shows declining CEO optimism

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