Group of top CEOs “maximizing shareholder profits no longer can be the primary goal of corporations”
August 20, 2019 / 190
A group representing the nation’s most powerful chief executives on Monday abandoned the idea that companies must maximize profits for shareholders above all else, a long-held belief that advocates said boosted the returns of capitalism but detractors blamed for rising inequality and other social ills.
In a new statement about the purpose of the corporation, the Business Roundtable, which represents the chief executives of 192 large companies, said business leaders should commit to balancing the needs of shareholders with customers, employees, suppliers and local communities.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” said the statement from the organization, which is chaired by JPMorgan Chase CEO Jamie Dimon. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
The statement comes amid a growing national debate about the responsibilities of corporations at a time of stark economic inequality. President Trump and the candidates vying for the Democratic presidential nomination have taken aim at companies for putting profits before the needs of workers and customers on issues as varied as drug pricing, outsourcing and data privacy. And for decades, wages have climbed only moderately as the pay of top executives at public companies has soared.
A range of lawmakers have been trying to force companies to consider society’s larger goals when they do business or be penalized. Democratic presidential candidate Sen. Elizabeth Warren (Mass.) has proposed a plan that would require U.S. corporations to turn over part of their board of directors to members chosen by employees. Sen. Bernie Sanders (Vt.), also vying for the Democratic nomination, would prohibit corporations from buying back their own stock — a move that drives up share prices — unless they offer a certain level of pay and benefits for workers.
Trump, even as he has taken many pro-corporate actions including a big tax cut in 2017 and deregulation, has publicly shamed companies for moving jobs overseas and threatened to take more aggressive action against pharmaceutical companies.
By making the statement, said Judith Samuelson, executive director of the Aspen Institute’s Business and Society Program, “the voice of corporate America — the Business Roundtable — has now signaled how much things have already changed.”