The Statement on the Purpose of a Corporation issued by the Business Roundtable, which has been signed by 181 Chief Executive Officers, has been referred to, by someone, as the death of Shareholders Primacy.
The Statement after reaffirming that
“businesses play a vital role in the economy, by creating jobs, fostering innovation and providing essential goods and services”
and after reminding that
“each of our individual companies serves its own corporate purpose”,
states that its signatories
“share a fundamental commitment to all their stakeholders”.
The commitment is
- to deliver value to our customers
- to invest in our employees
- to deal fairly and ethically with our suppliers
- to support the communities in which we work and eventually
- to generate long term value for the shareholders.
The Statement comes to the conclusion that
“each of our stakeholders is essential”.
The Shareholder Primacy is as the corporate governance doctrine which assigns to the shareholders first priority vis a vis all the other corporate stakeholders. It seems that it may be construed as clarifying that the shareholders have the priority as to the making of the basic decisions of their corporation. An issue which in countries like the United States is perhaps not so obvious since the management seems to have much wider authority than in many other parts of the world. This meaning of that doctrine does not interfere with the corporate social responsibility of businesses. It is suggested that this is the aspect of this important and very proper message which recognises all the various facets of the business activity and the role of all these stakeholders. As such, rather than the death of shareholder primacy, it might be seen as the dawn of a fair and welcome approach to a role of business which is far away from a selfish capitalistic attitude.