Apple backs move to make corporations accountable to citizens, not shareholders
Apple is one of over 180 major companies to sign a statement from the Business Roundtable saying that corporations need to focus on fair trading, ethics and responsibility instead of solely on shareholder returns.
Tim Cook is one of over 180 signatories to Business Roundtable's statement about corporate responsibilities.
Tim Cook has joined Michael Dell, Amazon's Jeff Bezos, and 180 other CEOs in signing their companies to a new pledge by the Business Roundtable. The organization, formed in the 1970s to promote business, is seeking to "modernize" the purpose of corporations. Specifically, it wants corporate CEOs to stop seeing shareholder's profits as their sole indicator of success.
"Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services," says Business Roundtable in a statement. "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."
Tim Cook signs Business Roundtable's document on behalf of Apple
This position may have arisen because of increasing pressure to break up large companies, in particular technology ones such as Apple, but it also represents that latest of the organization's forty years of statements on corporation ambition.
Since 1978, Business Roundtable has been regularly producing what it calls Principles of Corporate Governance, which set out to define what a corporation is, and to provide a goal for a CEO to aspire to.
"Each version of that document issued since 1997 has stated that corporations exist principally to serve their shareholders," continues the statement. "It has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable."
Consequently, the organization's updated document states that corporations should look instead to how they deal with their employees, their suppliers, and the communities where they are based.
"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," it says.
Those individual companies include the likes of Apple and also its supplier Corning, plus Amazon, and Dell. Other familiar American giants are on the list too, such as The Coca-Cola Company, and Exxon Mobil.
Tim Cook is one of over 180 signatories to Business Roundtable's statement about corporate responsibilities.
Tim Cook has joined Michael Dell, Amazon's Jeff Bezos, and 180 other CEOs in signing their companies to a new pledge by the Business Roundtable. The organization, formed in the 1970s to promote business, is seeking to "modernize" the purpose of corporations. Specifically, it wants corporate CEOs to stop seeing shareholder's profits as their sole indicator of success.
"Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services," says Business Roundtable in a statement. "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."
Tim Cook signs Business Roundtable's document on behalf of Apple
This position may have arisen because of increasing pressure to break up large companies, in particular technology ones such as Apple, but it also represents that latest of the organization's forty years of statements on corporation ambition.
Since 1978, Business Roundtable has been regularly producing what it calls Principles of Corporate Governance, which set out to define what a corporation is, and to provide a goal for a CEO to aspire to.
"Each version of that document issued since 1997 has stated that corporations exist principally to serve their shareholders," continues the statement. "It has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable."
Consequently, the organization's updated document states that corporations should look instead to how they deal with their employees, their suppliers, and the communities where they are based.
"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," it says.
Those individual companies include the likes of Apple and also its supplier Corning, plus Amazon, and Dell. Other familiar American giants are on the list too, such as The Coca-Cola Company, and Exxon Mobil.
Comments
http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/
And another:
It's time to put the shareholder value myth in the grave. America will be better off - Los Angeles Times
Long term this will be bad for competition, thus the reason you are seeing all the big companies jumping on this. If investors/venture capitalist think they will not have a front and only seat at the show, they will not bring their resources to new companies looking to get off the ground and grow. It is going to be very hard to have startups who can not be focus on those who give them money and all about everything else for everyone else.
I personal always felt Apple did best by the customers first and for most and investors came second, just from the fact Steve use to give Wall Street the finger and would not do what Wall Street wanted short term. This approach all most killed Apple a couple times so Apple was lucky ignoring those who chose to invest in the company.
Roy Harvey / Alcoa
Stephen Schwarzman / Blackstone
Larry Culp / General Electric
Bernard Tyson / Kaiser Permanente
James Robo / NextEra Energy
Thomas Williams / Parker Hannifin
Michael Tipsord / State Farm
By the way, informative post @StrangeDays ;
Classic example: Cloud computing. Who runs their data centers with the cleanest energy? Hint: It’s not Amazon....
So many household name CEOs are behind the idea of additional stakeholders now:
https://www.forbes.com/sites/stevedenning/2015/02/05/salesforce-ceo-slams-the-worlds-dumbest-idea-maximizing-shareholder-value/#72dec5ef7883
...in it, some criticisms of managing to the stock price alone:
The problems of shareholder value theory
These criticisms of the single-minded pursuit of shareholder value as measured by the current stock price are well-founded. The theory has contributed to:
Interestingly, savings banks in Spain were once forced to be 'profitless' in a modern sense but now basically don't exist due to a combination of corruption, political meddling and the financial crisis. It is quite ironic in a way. The banks, obsessed with pure profit, now have the savings banks in their collective stomachs and have flushed them down with government money. They have no real competition as a result.
I may be cynical towards these initiatives but I do hope something can come of them but it must be accountable.
For a start, in the tech sector, serial numbers need to be on invoices and consumers should be able to return devices to manufacturers (for free) and be able to trace things back to the disposal of the product with a breakdown of what was dumped/ burned or otherwise not put to good use.
The cost of this disposal is actually already included in the purchase price of CE devices in Europe. We just need an informational twist to reinforce our own commitment to the environment. Apple could quite easily provide such a service. In turn, companies would be far more committed to improving how they actually manage the reclaiming process of old unwanted equipment and the recycling process itself. Its recycling robots are a fine start but still largely symbolic at this stage.
I'm sure amazon could do a lot more in a lot of areas too. I know there are lots of plans afoot by the company to better manage their environmental impact but I just wish the process were faster.
AI will play a massive role with 5G in improving a vast array of hard to tackle problems and I also hope the companies involved can also set aside some of their revenues to help us manage the problems that have been hard to tackle so far.
There is a long etc and I am old and cynical but I haven't given up hope.
Ah! And some day I want one of these in my bedroom:
What you're referring to is the "delight the customer" management style, and it is exactly what is advocated by the anti-maximize-shareholder-value camp. They agree with you. Delighting the customer should be tantamount, do that first. Profits come from happy customers. Shareholders are made whole when the company becomes successful by delighting its customers and the resulting profit. Other stakeholders are the workers, and the community. We recognize this and respect everyone, not just the shareholders.
This is approach to running a company is not limited to mega-corps. In many ways it's even easier for the smaller business.
Imagine the creativity and competition that could be unleashed by putting a shelf life date on every corporation. It would change every market and encourage startups. It would change the priorities of the leadership and investors.
Nothing needs to be specifically advocated by them.
Hopefully Apple stops burning its money now and starts doing something valuable with it (to even give it away to passengers by is better than burning it, maybe use it to almost give away Apple stuff).
I got kicked out of the software company I worked for because shareholders demanded a better ROI.
This resulted in a total stranger (also a foreigner) and mercenary manager (say Mike) to kick out half the employees - while managing to kick out almost all key employees - and in doing so making the product unsustainable and ruining the company. A first rate morally challenged asshole.
No matter what your political stripes, this is an absolute good. But corporate behavior will only change when internal incentives change. If salary increases and bonuses continue to be tied to stock performance this statement means nothing. Follow through is everything.
This can be looked at with cynicism:
And in part I do look at it that way but the difference is that what is explained in the video is actually real. It is marketing and I can see that for what it is. But it is also real and the possibilities are awe inspiring. That's why I am hopeful in spite of everything. My cynicism included.
I live in a area plagued by forest fires and invasive species. There is a huge amount of good that technology and communications can do. From locating Asian Hornet nests (protecting autoctonous bees) to using autonomous drones to monitor overhead high energy power cables (a common cause of fires).
I don’t like companies focusing on benefitting shareholders who are in it solely to make money, but good intentions don’t automatically solve problems. We need to always consider reality rather then just assume our well-meaning intentions will make the world better. Contrary to popular belief, people are not basically ‘good’. People are ultimately self serving, and we as a culture are getting worse and worse (so obviously seen in things like ‘someone feels a particular way and so let’s all defy science and common sense to affirm that person’s feelings’).
It seems to me that taking away shareholder incentive will take away shareholder investment which will harm startups and businesses needing money.