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Top CEOs pledge to put employees over profits

Credit: Reuters Studio
Published on August 19, 2019 - Duration: 02:43s

Top CEOs pledge to put employees over profits

Companies should focus on social responsibilities as well as profits, the Business Roundtable, a group of corporate chief executives that includes the head of the largest U.S. bank and the CEO of the world’s largest airline, said on Monday.

Lisa Bernhard has more.

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Top CEOs pledge to put employees over profits

Here’s an idea: what if corporations cared less about shareholders and more about doing good in the world?

On Monday, 181 CEOs of American companies, known together as the Business Roundtable, pledged to do just that.

The group, led by JP Morgan Chase CEO Jamie Dimon, put out a statement saying businesses should invest in employees, deal ethically with suppliers and protect the environment by embracing sustainable practices, marking the first time the nearly 50-year-old organization – whose members also include Amazon’s Jeff Bezos and Apple’s Tim Cook - has said shareholder value is not the No.

1 priority.

Reuters Breakingviews columnist John Foley: (SOUND BITE) (ENGLISH) REUTER BREAKINGVIEWS COLUMNIST JOHN FOLEY SAYING: “There’s always been this belief that companies are there primarily to serve shareholders, because shareholders after all - they vote in the directors.

Shareholders technically own the company.

But these CEOs are saying, ‘Actually we’re here to serve a bunch of people - and actually shareholders are the last ones on the list after employees and suppliers and communities more broadly.’ So, this is a kind of swerve away from what’s called ‘shareholder primacy’ towards a more kind of enlightened capitalism.” The CEOs a virtual who’s who when it comes to captains of industry, including Mary Barra of General Motors, Brian Roberts of Comcast and Lynn Good of Duke Energy.

Politics and shifting demographics among the possible factors prompting Monday’s pledge.

(SOUND BITE) (ENGLISH) REUTER BREAKINGVIEWS COLUMNIST JOHN FOLEY SAYING: “One is just that it reflects the reality that more and more shareholders actually want companies to be doing good, or at least not doing bad.

And that might be because of the kind of demographic shift, that you have younger generations, millennials, buying financial assets and they want companies to be a force for good.

But let’s also be realistic: there is an election coming up next year in the United States and some of the candidates for that presidential election have been quite outspoken on the subject of reigning in capitalist excesses – things like CEO pay, that is at the moment almost 300 times the average salary.

So, they may just be getting ahead of things just in case the election goes in a slightly more populist or less capitalist direction.” If all this makes you want to cheer, remember this: actions speak louder than words.

(SOUND BITE) (ENGLISH) REUTER BREAKINGVIEWS COLUMNIST JOHN FOLEY SAYING: “The real test is going to be when companies start doing things antithetical to shareholders interests.

Why couldn’t a company, for example, donate a big chunk of its profits to a charitable foundation that helps people who are impoverished?

Why couldn’t a company say, ‘We’re going to encourage shareholders to vote an employee representative on the board from now on?

Why couldn’t these CEOs cut their pay from close to 300 times the average salary to something a lot more reasonable?

All of these things are possible and it’s only when that kind of stuff happens that we’ll know that his is more than just talk.”

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