The organization representing the nation’s most powerful chief executives is rewriting how it views the purpose of a corporation, updating its decades-old endorsement of the theory that shareholders’ interests should come above all else.
As The Washington Post reports, the new statement, released this morning by the Business Roundtable, suggests balancing the needs of a company’s various constituencies and comes at a time of widening income inequality, rising expectations from the public for corporate behavior and proposals from Democratic lawmakers that aim to revamp or even restructure American capitalism.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” reads the statement from the organization, chaired by JPMorgan Chase CEO Jamie Dimon.
An analysis released Aug. 14 by the Economic Policy Institute, a left-leaning think tank, found that chief executive compensation had grown 940% since 1978, by one measure, while typical worker compensation had risen just 12% over the same period.
The group says its members “share a fundamental commitment to all of our stakeholders,” and commit to doing well by their customers, employees, suppliers and local communities. “Each of our stakeholders is essential,” the group adds. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
The new statement puts an official stamp on a more stakeholder-driven approach to governance that some CEOs have individually advocated for in recent years. It comes more than two decades after the lobbying group, in a 1997 document about corporate governance principles that it has periodically updated, took an explicitly shareholder-first stance. “The Business Roundtable wishes to emphasize that the principal objective of a business enterprise is to generate economic returns to its owners,” it wrote at the time. Read the full story.
