NEW: Harvard Law’s Lucian Bebchuk and Roberto Tallarita point at inconsistencies between purported intent of signatories to the 2019 Business Roundtable Statement and commentators who have expressed support for the Statement and the actions of the signatories’ companies and ostensibly inconsistent statements of supportive commentators in Was the Business Roundtable Statement on Corporate Purpose Mostly for Show? — (1) Evidence from Lack of Board Approval, Was the Business Roundtable Statement Mostly for Show? — (2) Evidence from Corporate Governance Guidelines, and Was the Business Roundtable Statement Mostly for Show? — (3) Disregard of Legal Constraints.
Shareholder Rights Group’s Sanford Lewis suggests recovery from the coronavirus pandemic provides an opportunity to unity stakeholder interests, while questioning the realistic implementation of stakeholder capitalism in the absence of rules and concepts of stakeholder governance in Stakeholder Capitalism and the Pandemic Recovery.
Wachtell argues that the shareholder value maximization model of corporate governance is unsustainable in the contemporary political and commercial environment, and anticipates consequences that corporate directors may expect to confront in the coming year in Thoughts for Boards of Directors in 2020.
Equilar, Inc. examines whether the Business Roundtable’s 2019 Statement asserting that companies should embrace the stakeholder model over shareholder primacy represents a “fundamental departure from corporate governance trends.” Performance Metrics: Accelerating the Stakeholder Model.
Professor Jesse Fried argues that the Business Roundtable’s 2019 Statement moving away from shareholder primacy will change nothing given control that stockholders have over corporate directors and officers, but that the move away from shareholder primacy would be harmful in that corporate managers could decide to use assets to serve other stakeholders rather than stockholders. The Roundtable’s Stakeholderism Rhetoric is Empty, Thankfully.
Barron’s discusses whether it is possible to predict if or when the stakeholder model from the Business Roundtable’s 2019 Statement will supplant shareholder primacy, suggesting governance changes are cyclical,. Are the Days of Shareholder Primacy Numbered? It will Take More Than a Few White Papers to Force a Change.
UCLA’s Professor Stephen Bainbridge subtly maintains that Martin Lipton and William Savitt’s response to criticisms of the Business Roundtable’s 2019 Statement that argue a corporation has no purpose other than profit maximization “contains an astonishing number of erroneous statements about the purpose of the corporation.” Wachtell, Lipton’s False Gospel of the Law of Corporate Social Responsibility and the Reasoning Behind It.
Wachtell’s Martin Lipton and William Savitt discuss the UK’s adoption of The UK Stewardship Code 2020, which parallels proposed corporate governance, stewardship and engagement principles advocated in the New Paradigmframework that Lipton presented at the World Economic Forum in 2016. The New Paradigm.