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Current Events » in reply to What prevents the directors of a corporation from establishing the corporations values?

The fact that "shareholder value" is the only value

It's long been understood, in culture if not in law, that the only goal of a corporation is to "increase shareholder value". Inflate the stock price or pay a dividend to make sure the stockholders don't question the inflated executive salaries. Anything goes as long as everybody gets a taste.

Some corporations do adopt formal values statements that say they respect the environment, or their employees, etc. But those values always take a back seat to profit. They have to, or the stockholders would fire the foolishly idealistic CEO.

That's why the benefits corporation, was recently invented. A "b-corp" is a for-profit corporation that's allowed to put the public good first for real, not just as a PR trick; and keeping the shareholders fat is allowed to be a secondary concern. Another way to state it is that the shareholders judge the company's performance not in financial terms, but in terms of how well it meets specified goals that benefit society in general. Shareholders can't sue for not getting paid off, only for being disappointed when the company doesn't honor its lofty ideals.

The ironic thing about a b-corp is that corporations, once upon a time, were chartered by national or state legislatures to act in the public interest, for fixed terms that required them to periodically prove that they had indeed operated in the public interest. Which is pretty much what a modern b-corp has to do. The way we used to keep corporations on a short leash in the 19th century is about the only aspect of that century I'd be happy to see return.

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