Steadily rising societal expectations are pushing companies to put their stakeholders first, and shareholders second — but some shareholders are not having it. Companies that don’t comply with the stakeholder capitalism agenda are quickly sanctioned by consumer groups and the media; and CEOs who fall short can become instant pariahs. As a result, companies are…
Category: stakeholders
PWC’s Annual CEO Survey 2022
PWC’s 25th annual CEO survey focused on “the power of trust.” We found that highly trusted companies are more likely to have made net-zero commitments and to have tied their CEO’s compensation to nonfinancial outcomes, such as employee engagement scores and gender diversity in the workforce. Correlation is not causation, and we’ll continue to explore…
Response to Larry Fink on Blackrock’s Stakeholder Rhetoric
On Project Syndicate, Mariana Mazzucato responds to Larry Fink’s annual letter, calling for a more rigorous and comprehensive understanding of stakeholders, including the government and employees. Why do drug prices not reflect the original public contribution (even when the government reserves “march-in” rights that require pharmaceutical companies to license their products)? Why are intellectual-property rights…
Ira Millstein: Stakeholder Capitalism Is Slowly Advancing – WSJ
Ira Millstein’s letter calls for more optimism on the BRT’s stakeholder claims, though (1) he admits he has no data to support it and (2) even he does not expect the executives who make the claim of a stakeholder focus to deliver; he thinks it will be the result of market forces from outside the…
‘Stakeholder’ Talk Proves Empty Again – Lucian A. Bebchuk and Roberto Tallarita
Lucian A. Bebchuk and Roberto Tallarita update their previous research and show that the Business Roundtable CEOs who promised two years ago to shift their priorities to stakeholders…didn’t. We’ve identified almost 100 signatory companies that updated their corporate governance guidelines by the end of 2020. We found that the companies that made updates generally didn’t add any…
Danone board ousts ESG Advocate Emmanuel Faber as chief and chairman | Financial Times
Danone’s board of directors has decided to replace Emmanuel Faber as chief executive and chairman, bowing to pressure from activist investors and blowing up a two-week-old compromise designed to have him remain as chairman….Activist investors attacked Danone for what they cast as its chronic underperformance compared with larger rival Nestlé, and publicly called for Faber’s…
Proposal With Caveat: A Purpose-Based Corporation
Shareholder value maximization has been severely criticized in recent years, but it is not clear what if anything is to take its place. In this paper we review three models of corporate value creation – shareholder value, stakeholder value and company purpose achievement – and their implications for corporate governance. We first discuss shareholder value and how…
Antitrust law: The next stakeholder capitalism battleground? | Fortune
[S]ome reformers have called to replace the “consumer welfare” standard with “effective competition,” using antitrust to “protect” market participants throughout the supply chain, including workers. Others propose that enforcers seek “stakeholder remedies,” such as changes to corporate governance, as part of antitrust enforcement. Need to clear that merger? Fork over a few board seats to…
50 Years of Blaming Milton Friedman. Here’s Another Idea–Binyamin Appelbaum
The 50th anniversary of the publication of Milton Friedman’s essay advocating profit (within the law) as the primary purpose of the corporation in the New York Times was observed with reactions and responses from a range of experts. In our view, most missed the point. Unless otherwise explicitly noted and disclosed to investors in the…
How’s the CEO ‘Stakeholder Pledge’ Working Out? Depends Who You Ask – WSJ
VEA Vice Chair Nell Minow is quoted in this WSJ column by John Stoll about the BRT’s stakeholder rhetoric. Nell Minow, vice chair of ValueEdge Advisors, which consults with institutional investors on corporate governance, agrees with Mr. Bebchuk about tradeoffs, but she cautions “those tradeoffs are rarely permanent.” She said directors need to push executives…
ValueEdge Advisors 