William Gallagher
Apple is one of over 180 major companies to sign a statement from the Business Roundtable saying that corporations need to focus on fair trading, ethics and responsibility instead of solely on shareholder returns.
Tim Cook has joined Michael Dell, Amazon's Jeff Bezos, and 180 other CEOs in signing their companies to a new pledge by the Business Roundtable. The organization, formed in the 1970s to promote business, is seeking to "modernize" the purpose of corporations. Specifically, it wants corporate CEOs to stop seeing shareholder's profits as their sole indicator of success.
"Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services," says Business Roundtable in a statement. "If companies fail to recognize that the success of our system is dependent on inclusive long-term growth, many will raise legitimate questions about the role of large employers in our society."
Tim Cook signs Business Roundtable's document on behalf of AppleThis position may have arisen because of increasing pressure to break up large companies, in particular technology ones such as Apple, but it also represents that latest of the organization's forty years of statements on corporation ambition.
Since 1978, Business Roundtable has been regularly producing what it calls Principles of Corporate Governance, which set out to define what a corporation is, and to provide a goal for a CEO to aspire to.
"Each version of that document issued since 1997 has stated that corporations exist principally to serve their shareholders," continues the statement. "It has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable."
Consequently, the organization's updated document states that corporations should look instead to how they deal with their employees, their suppliers, and the communities where they are based.
"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," it says.
Those individual companies include the likes of Apple and also its supplier Corning, plus Amazon, and Dell. Other familiar American giants are on the list too, such as The Coca-Cola Company, and Exxon Mobil.
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67 Comments
Sound, sensible direction. One we see in other nations where additional stakeholders are recognized, including workforce. Managing to the stock price alone is known as “the dumbest idea in the world”:
http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/
And another:
It's time to put the shareholder value myth in the grave. America will be better off - Los Angeles Times
Apple can jump on this now since they have more cash than anything else, they no longer have to worry about investors and the capital they bring to party. As the saying going as long as you are using other people's money they get to decide how you spend that money. You can not take other people's money and then ignore them.
Long term this will be bad for competition, thus the reason you are seeing all the big companies jumping on this. If investors/venture capitalist think they will not have a front and only seat at the show, they will not bring their resources to new companies looking to get off the ground and grow. It is going to be very hard to have startups who can not be focus on those who give them money and all about everything else for everyone else.I personal always felt Apple did best by the customers first and for most and investors came second, just from the fact Steve use to give Wall Street the finger and would not do what Wall Street wanted short term. This approach all most killed Apple a couple times so Apple was lucky ignoring those who chose to invest in the company.
Meh. A lot of this stuff is awesome once you have cash coming on a continual basis. the problem is when you don't have cash coming in regularly, or enough of it. I work in the startup area as well as consulting. Life has taught me one thing in this area, take care of the customer. If you take care and focus on the customer, then you create value for all. If you focus on just the shareholder, you don't create value for anyone long term. Sears, IBM, and GE are current examples of companies that have focused too much on the shareholder, and all of their businesses have seen a significant downturn.
Pretty much every member signed on the the declaration, as the AI article says over 180 of them (181 to be exact). Ignoring the couple of corporations who are in-between CEO's at the moment and unable to sign, there are seven others who specifically did not tho their reasoning for not doing so are not stated:
Stephen Schwarzman / Blackstone
Larry Culp / General Electric
Bernard Tyson / Kaiser Permanente
James Robo / NextEra Energy
Thomas Williams / Parker Hannifin
Michael Tipsord / State Farm
By the way, informative post
Sure. The CEOs just signed off on the statements their ad agencies were hired to write.