Shareholder Value No Longer Main Objective

[marko]

I'm not sure how I feel about this.

https://www.cnbc.com/2019/08/19/the...-value-is-no-longer-their-main-objective.html

In short, companies are moving away from being focused on shareholder value and leaning toward "...Investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities..."

Yes, I want the companies I invest in to be good citizens, invest in employees and deliver value to customers--that's how you build a good company--but to me that should be a means to an end in delivering value to me, an owner of that company and not the goal itself.

Don't get me wrong, this is all good stuff (hence my ambivalence) but to me this is a sea-change that could affect valuations and profits as companies might start to focus on getting more social points than delivering financial value. "Profits are down because we spent $1B building a new hospital"

For me, I'm not too keen on suddenly being "one of" the stakeholders, sharing a seat with a number of others less invested in the company's success.

OTOH, I suspect that most successful companies are already doing this in some fashion and could be just window dressing for a changing set of feel-good expectations.

Semantics? Business as usual? A radical change in how business is done?

Not trying to be overly provocative as, again, I'm not quite sure what to make of all this myself.

 

[Jeffman52]

I see this as window dressing.. Investors are interested in profits. I don't see that part changing. At the end of the year when they sit down to discuss profits they wont want to hear that you used what could have been their dividends to build a local hospital.

Maybe I am being too cynical.

 

[Aerides]

I read the piece from axios this morning on the same topic, and I think it winds up in the same place: If you're ignoring your employees and customers on the stuff they mention, you risk walk outs and boycotts and negative publicity which decimates your bottom line and shareholder value.

I think ultimately it becomes BAU, but it's just recognizing that there are different ways to get there, and benefits from embracing what your customers value, as well as pitfalls if they ignore that stuff.

 

[Gumby]

The corporate form, and the liability shield it provides for shareholders, is an artificial creation of the law. Created because at one time the legislature felt that the public good would be served thereby. If corporations no longer serve the public good, perhaps that protection needs to be revisited. As you might imagine, public good -- as defined by those who pass the laws today - may include more than just the enrichment of shareholders. It occurs to me that these CEOs are taking action to preempt that question from being asked.

 

[pb4uski]

It should be old news. How can you deliver outstanding shareholder value without happy and motivated employees, satisfied customers who value your product and/or service and suppliers who feel they are being treated fairly? Supporting the communities that you operate in contribute to the perception of the company by employees, customers and suppliers.

It is all a matter of balancing them with delivering good performance for shareholders.

 

[Beststash]

I'm not buying it. Admittedly, I have not been in corporate America in almost 16 years but profit and shareholder value has been the objective since the early 80's. I always called it free-market capitalism.

These days I see a lot of market manipulation, definitely not free-market. So along with that we might be moving in a more human-centered capitalism (markets exist to serve our common goals and values). Sadly, I think it is mostly rhetoric. I think it would be a positive move.

 

[CardsFan]

It should be old news. How can you deliver outstanding shareholder value without happy and motivated employees, satisfied customers who value your product and/or service and suppliers who feel they are being treated fairly? Supporting the communities that you operate in contribute to the perception of the company by employees, customers and suppliers.

It is all a matter of balancing them with delivering good performance for shareholders.

True. And then there is the lip service. "We value our employees", but don't dare take a full two weeks vacation at one time, or "and here are the tickets to China for tomorrow morning, the customer called and he NEEDS you there."

IMHO just more window dressing. Individuals can mean well, and do try to make a work/life balance. Ultimately, the bean counters rule.

 

[MichaelB]

In short, companies are moving away from being focused on shareholder value and leaning toward "...Investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities..."

Are companies actually doing that, or are they just talking about it?

 

[RobbieB]

Every Co I've worked for had these values. What's new?

 

[marko]

Are companies actually doing that, or are they just talking about it?

As noted in a few posts, I think successful companies have been doing it all along. That's why they're successful.

The more I think about it, I think this latest headline is a matter of CEOs just 'selling' their SOP to fit the latest trend.

 

[marko]

I read the piece from axios this morning on the same topic, and I think it winds up in the same place: If you're ignoring your employees and customers on the stuff they mention, you risk walk outs and boycotts and negative publicity which decimates your bottom line and shareholder value.

I think ultimately it becomes BAU.....

Same as it ever was unless we're talking about sweatshops from the 1880s.

(what is BAU?)

 

[jazz4cash]

I thought we all agreed that generally megacorp culture has evolved to de-value individual employees. (That’s why I ER’d. ). Other than that I would say my mega was focused on Stakeholders 20 years ago. Job Satisfaction was a key element for me. It was really tough and got tougher for mega to play a long game.

 

[copyright1997reloaded]

Since I'm the "stakeholder" providing the cash, I will sell my investment immediately if/when I feel my interest is becoming secondary.

 

[Aerides]

Same as it ever was unless we're talking about sweatshops from the 1880s.

(what is BAU?)

Business As Usual

 

[Senator]

Regardless of what the CEOs say, their compensation is derived from not only Salary, but stock options.

A CEO will kill baby seals with a barb-wire wire wrapped baseball bat named Lucille, if it means their stock options go up in value.

https://www.amazon.com/Wooden-Baseball-Negan-Lucille-Barbed/dp/B01N6KLYW1

 

[marko]

Business As Usual

D'uh!! Thx

 

[Aerides]

Often, the moderator team will say "thanks for an interesting discussion" when closing a thread, but this one never had that chance, and multiple posts required removal.

Please, let's all strive to keep partisan political commentary out of threads to allow them to continue for everyone.