Introduction In a statement with the Business Roundtable (BRT), 181 major American CEOs recently proclaimed their desire to serve a variety of stakeholder interests beyond merely those of shareholders.1 However, stakeholder maximization is nearly impossible today for public corporations due to the rise of activist hedge funds; such funds, which exercise unprecedented control over public…
Tag: Shareholder Primacy
Being “Green” is Not Always a Good Thing: Examining the Legality of CSR-based Executive Compensation Metrics
On August 19, 2019, the Business Roundtable1 released its “Statement on the Purpose of a Corporation.”2 This statement broadly articulates that a corporation’s purpose is to serve the interests of (1) its customers; (2) its employees; (3) its suppliers; (4) its communities, and (5) its shareholders.3 The statement concludes, “Each of our stakeholders is essential….
No Benefit: How Benefit Corporations Accidentally Undermined Corporate Social Responsibility
I. The Basic Difference Between a Traditional Corporation and a Benefit Corporation The corporate form is a legal entity with a well-established primary purpose: to generate profit for the corporation’s shareholders.1 Although the advisability and impact of the so-called “shareholder primacy norm” has often been debated,2 the norm has endured and still commands the respect…