In shift, top CEOs say shareholder value not top goal

Maximizing profit for shareholders, long seen as a corporation’s main function, can no longer be the primary goal, a group of 181 top CEOs said on Monday.

“We know that many Americans are struggling. Too often hard work is not rewarded, and not enough is being done for workers to adjust to the rapid pace of change in the economy. 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,” the executives wrote in a Business Roundtable letter.

{mosads}The letter, which defined a new statement of purpose for the Business Roundtable, called on investors to also “support companies that build long-term value by investing in their employees and communities.”

Corporations, the executives wrote, should have a broader group of stakeholders including customers, employees, suppliers and communities, as well as a long view of benefit for shareholders.

Their letter comes at a time that income and wealth inequality have become central themes in presidential politics. Sen. Bernie Sander (I-Vt.) made waves in the 2016 Democratic presidential primary by focusing on the wealth of the top 1 percent and is repeating those talking points in his current campaign.

Sen. Elizabeth Warren (D-Mass.), meanwhile, has called for restructuring corporate boards to require that workers and other stakeholders have a seat at the decisionmaking table in large companies.

Last year, Warren specifically called out the Business Roundtable for its shareholder-first approach. 

“For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal,” she wrote in a Wall Street Journal op-ed.

Not every member of the Business Roundtable signed on to the new vision, however.

The CEOs of Alcoa, Blackstone, General Electric, Kaiser Permanente, NextEra, Parker Hannifin and State Farm were absent from the list, according to Axios.