By on August 21, 2019

This week, General Motors CEO Mary Barra and Ford CEO Jim Hackett were among 181 corporate executives claiming their companies need to do more than just deliver value to shareholders. If you just blacked out, we’ll reiterate — chief executives around the country are suggesting businesses need to do more than pad their share price.

We’re wondering why the sudden change of heart. 

On Monday, the Business Roundtable — an association of the United States’ largest companies — announced the release of a new “Statement on the Purpose of a Corporation” to lead their companies for the benefit of all stakeholders. That incorporates customers, employees, suppliers, communities and shareholders.

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the group said in the statement. “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.”

There are a multitude of angles from which to view this. Occupy Wall Street may have failed in its primary goal, but the public purview has grown increasingly suspicious of giant corporations with lots of money and global interests. That only worsened as CEO compensation continued to climb. In fact, a study last week stipulated that CEOs have watched their pay grow by 1,000 percent over the last 40 years. They now make 278 times more than the average worker.

As society becomes increasingly fractured, customers are also looking at businesses that share their values. This has resulted in an influx of business-related propaganda. That’s one reason why you see so many automakers promoting green initiatives without bending over backwards to make tangible changes that would make a real difference. Unfortunately, one of those differences could end up ruining the company.

Businesses need to make money and, regardless of what the Business Roundtable says, they are still beholden to shareholders and the market. But they also cannot have the general public showing up at their offices with torches and pitchforks. The proposed Statement on the Purpose of a Corporation could be a way to assuage anger via a fluffy populist message, and there is plenty on offer here. The general message doesn’t possess much in the way of specifics, though it does assure its readers that employees, shareholders, customers, communities, and the environment will all be supported and respected.

That sounds lovely. However, without clear-cut goals regarding various industries, we’re not sure what good it actually does. Instead of making vague pledges collectively, these corporations could have simply instituted sweeping changes individually. We’re just throwing it out there, but this could all stem from businesses fearing new regulations or a revamping of American capitalism as the political landscape shifts.

Of course, there are other ways to frame this. Some executives and market analysts have grown critical that endlessly trying to appease shareholders and make every quarterly report look better than the last is negatively impacting businesses in the long term. Encouraged by a populace that’s now annoyed with growing income disparity, corporations may see a need to make honest changes to mitigate future disasters.

“This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” said Darren Walker, President of the Ford Foundation, in a prepared statement.

While the release dealt primarily with American issues, Ford spokesman T.R. Reid painted a more global picture when speaking with The Detroit News. “The principles described in the statement by the Business Roundtable are consistent with how Ford thinks about and conducts our business,” he explained. “Human progress depends on freedom of movement. We are committed to delivering that freedom to people around the globe, earning and keeping their trust along the way.”

The global aspect makes this more difficult. Most of the companies that signed the Statement on the Purpose of a Corporation operate worldwide, meaning their interests may not always be congruous with America’s.

We suppose the big news is that the Business Roundtable embraced shareholder primacy in the 1990s and now appears to be abandoning it — backed by the United States’ largest automakers. Even Fiat Chrysler, which isn’t officially big enough to be a Roundtable member, said it supported the release’s message. But unpacking what that message actually means is needlessly difficult.

Here are the core tenets corporate signatories have committed to:

Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

It would have been impossible to craft a release that accurately provided specific details applicable to all 181 businesses, but the above doesn’t even effectively establish the groundwork. What does “respect” look like? Does it extend to markets outside of the United States? What constitutes fair compensation of employees and when does that take place? There’s so much being said without any real promises being made and it’s doubtful anyone expects Ford or General Motors to issue a follow-up release outlining those aspects in great detail.

[Image: Sergey Akhrameev/Shutterstock]

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101 Comments on “Shareholders No Longer Riding Shotgun, Say American Automakers...”


  • avatar
    Hummer

    Mary Barra the queen of appealing to share holders says this? When pigs fly.
    I guess this means all EV research and development is done, meaning full-size SUVs can sell for less than $25,000 profit per unit.

    • 0 avatar
      Hummer

      Who exactly are they trying to appeal to precisely? It hasn’t been consumers in at least 10 years so while that should be the obvious answer I doubt it is.

      • 0 avatar
        Hummer

        Along with the below article where automakers are complaining about regulations being cut its become pretty clear what the issue is. Cutting regulations in no way hurts the manufacturers, they’re free to build the same turbo 4 cylinder clown cars they are now. But without government forcing people to buy these crap cars these automakers have essentially spent billions over the last few years getting hybrids, electrics, and horribly running turbo engines onto the market only for small take up and little interest.
        Make no mistake automakers only want the regulations to remain in place so there stock prices don’t drop when they announce that they wasted billions on misguided efforts to build vehicles that customers do not sufficiently exist for.

        • 0 avatar
          Lou_BC

          @Hummer – in some cases turbo engines have been a disaster for car companies …. looking at Honda on this one but if one looks at Ford’s F150, turbo boosted engines are the bulk of their sales. 9 years of them and I haven’t heard of any glaring reliability problems.
          And to point out the obvious, anyone in the market for a HD diesel want to go back to a normally aspirated diesel?

      • 0 avatar
        bunkie

        It’s politics.

        There are an awful lot of people out there who, rightfully, have a deep distrust of corporations and what they have done to the American social fabric in search of ever-higher stock prices. The smarter ones realize that, sooner or later, this is going to come back to haunt them. Many of us have been laid off multiple times after “disappointing quarterly earnings reports” and we are pretty ****ing pissed off about it, to name just one aspect of the drive to squeeze every drop of blood from employees, customers, the environment and communities.

  • avatar
    JoeBrick

    They signed on to a statement declaring allegiance to some sort of fuzzy do-gooder creed involving social justice, green energy, and ‘corporate responsibility’ to whoever will give them huge government grants and loans. Next they will be declaring themselves to be non-profit corporations dedicated to fighting global warming, racism, international borders, and nationalism.
    I am not surprised that Merry Berry – affirmative action CEO- signed onto this.

    • 0 avatar
      Luke42

      It’s called “Stakeholder Management”. I learned about it in business school.

      A brief summary of the idea:
      https://en.m.wikipedia.org/wiki/Stakeholder_management

      Basically, the idea is that there is more to running a business than just the stockholders. The stockholders are definitely stakeholders, but so are the customers.

      So, if you f*ck over your customers in order to pay greater dividends to your stockholders, you will have sucxeeded by the conventional definition of business success — but you’ve failed at Stakeholder Management.

      There are, of course, stakeholders other than customers and stockholders: employees, suppliers, and people affected by your business’s who don’t actually do business directly with your company. The idea is to maximize the total return to all stakeholders, not just stockholders. Yes, it’s more complicated and harder to run a business through stakeholder management. The stakeholders exist regardless of whether you care about them or not, but your business is likely to last longer if none of the stakeholders are f*cked over.

      If you consider that hippie dippy baloney, that’s fine — but you at least understand what it actually is first.

      • 0 avatar
        James Charles

        Luke,
        Interesting, your comment. I’m currently working as a modeller and analyst on a org restructure. I’m on the project but not on a team, I’m working for the project lead, advising and designing ….. and finding solutions.

        We are creating a dynamic, complicated and complex enterprise between a major US airframe manufacturer and the government.

        It amazes me how people like joebrick can pass judgement with no knowledge on how the world works.

        What joe needs to understand is the lateral capability of a business is where the strength is, that is where stakeholders sit, either in a matrix senario or as a direct part of the enterprise framework.

        The US is the same at a governmental level with multitudes of nations involved with different levels of interactions with the US.

        Trump with his method of bilateral arrangements will work against the US when it will require multilateral support against the Chinese.

        • 0 avatar
          Luke42

          The Dunning-Kruger Effect is alive and well, I’m afraid.

          Being of an academic persuasion, I prefer to explain what I think someone is missing. I try to encourage others to do the same. A day in which I learn something is a day that is not wasted!

          BTW, I’m an aviation entheusiast, so I’m sure I’d find your work fascinating!

  • avatar
    Fred

    They are worried that younger folk are more concerned about social issues. No one wants to work for corporate that is judged solely on monthly numbers. Also they are scared that progressives are drawing large support. They see the writing on the wall, that’s why they joined with California on fuel economy.

    • 0 avatar
      Luke42

      Large companies who treat their employees as consumables must manage their “employment brand” carefully.

      At least that’s Marissa Meyer told me when she was my boss^6. The first part was communicated implicitly through the employee habdbook, the second part was communicated explicitly during a weekly all-hands meeting.

      Regardless of whether this is window dressing for the sake of employment-branding or an actual embrace of Stakeholder Managemenr, the press release will look the same.

  • avatar
    ajla

    “181 corporate executives claiming their companies need to do more than just deliver value to shareholders.”

    /Automates everything. Lays off 30% of workforce.

    • 0 avatar
      Lou_BC

      “Automates everything’ has been going on since post WWII.

      AI will be then next technological advancement to kill jobs. Robots don’t show up to work drunk, stoned, p!ssed off at the boss or expect large paychecks and thick retirement packages.

      • 0 avatar
        smartascii

        This is 100% accurate. Robots also don’t buy anything, so I’m not sure who *will* buy the things the robots make, but I’m sure that’s somebody else’s problem.

        • 0 avatar
          Lou_BC

          @smartascii – there hasn’t been enough “investment” in education for the populace so there can be easier adjustments to technological change. There is a huge shortage in skilled trades. Those will be less likely to be automated out of existence.
          I don’t have auto factories in my part of the world but lumber mills abound. Locals will be f^cked if they don’t have a skilled trade or post secondary education. In the past 40 years I’ve seen first hand what automation does.

  • avatar
    cprescott

    As a shareholder of a company, I want them to be profitable and to pay me a dividend and to work toward keeping their share price so that there is a positive trend there.

    I don’t want this company to get into social and political anything. what has happened is that we now have social extortion – if you dare make a move that appears (in the slightest) to be out of step with the social cause of the day, then there is heck to pay. I refuse to buy Nike because they seek to rub people’s noses into a false premise and support someone who advocates violence against police just as he is whining about police violence toward a certain protected class.

    Businesses need to shut up and deliver a quality product at a price that allows them to make a profit and to reward those people who put money into the company to make that happen. I will also want the employees to be treated fairly, but I refuse to allow them to extort their pay based upon their over-inflated sense of self-worth.

  • avatar
    dal20402

    Over the last 40 years or so, legal academics have been insisting with increasing stringency that corporations that consider anything other than shareholder value in choosing their actions are derelict in their duties. As the shareholders (or, more precisely, their hired analysts) got ever more obsessed with short term results, all sorts of increasingly bad effects for society emerged as the consequences of this sort of thinking. The pendulum is swinging the other way now. For years, the less-vulturey cohort of CEOs have been as sick as anyone else of the chorus of analysts squawking about the impact of every single long-term investment or citizenship effort on next quarter’s bottom line. Now they feel like things have gone far enough that they can say something about it.

  • avatar
    87 Morgan

    ugh, this must be the conference that Chase CEO, Jamie Dimon was at.

    Costco is the only major corporation that I can think of that does have executives who ride the backs of their workers to the gravy train every day.
    Why not use the insurance provider that I get my health insurance from, Aetna: CEO Bertolini received $59M in total compensation in 2017.
    In 2017 Aetna had 49,828 employees. Each employee could have made $1,063 more if the CEO could have somehow been paid a paltry $6M in salary, bonus, and options. Most likely each employee could have made close to $2500 more if you averaged out all of the C-Suite pay to a ‘normal’ handful of million dollars per year. I mean seriously, 60M? That is $5M a month in compensation. No one is worth that kind of money.

    Something has to change. The C-Suite folks can’t continue to pay themselves the enormous sums they receive while trying to look their employees are getting poverty level or barely above wages.

  • avatar
    thornmark

    GM’s stock peaked in 1967 and it was all downhill from there.

    I suspect shareholders would say that management didn’t do a very good job from their perspective.

    I’d say the B of D’s largely stink – they take a paycheck and do not so much for it because so many of them are celebrities that are out of their league.

    Just look at Theranos – altho not a public company – the Board had no idea what that psycho was doing because they were out of their league – and she wanted it that way

  • avatar

    Something needs to change because it seems to me that companies cannot keep prioritizing quarterly results over long-term sustainability. Some quarters will be down, and that’s natural, but a down quarter now results in a sell-off.

  • avatar
    PrincipalDan

    If GM does something ON PURPOSE to lower their dividend AND that directly benefit the consumer – I’ll be more surprised than if the Indians win the World Series and the Browns win the Super Bowl.

    • 0 avatar
      JMII

      I hear the Browns actually have a chance this year. Maybe the tide is turning?

      My wife works for a company who puts employee’s first. Their CEO figured out if the employees are happy they work harder, which earns them more loyal customers, which increases the bottom line. This company is constantly ranked in the Top 10 companies to work for and is very profitable.

      Henry Ford realized that paying his employees enough money to afford the product they were making was good for business.

      However as others have noticed this announcement smells like nothing more then typical PR speak. I doubt anything will change because these massive companies move at snail’s pace due to their own weight. I don’t see CEO’s taking a salary cut to make this happen either, their egos are just as massive as the companies they serve.

      • 0 avatar
        JoeBrick

        @JIMI- “Henry Ford realized that paying his employees enough money to afford the product they were making was good for business.”
        Maybe as an afterthought. Ford’s REAL motivation was his company’s self-interest. His competitors paid $3 per day for ten hours work. Henry realized that if he CUT the shift from ten hours to eight hours, HE COULD RUN THREE SHIFTS, utilizing his factory 24 hours a day rather than 20 hours with 4 hours sitting idle. He also knew that if he paid more- $5 per day (for 8 hours work) he would have the cream of the crop for workers. Every auto worker wanted to work for Ford. He had less labor trouble, more production, and more sales. Eventually the price of his car went from over $800 to only $265. And his workers COULD afford them. But that was not Henry’s goal. It is no accident that Henry Ford was the first Billionaire back when a billion was a lot of money.

        • 0 avatar
          Lou_BC

          @JoeBrick – Henry Ford’s motives may have been based on “self – interest” but his approach does show that a well paid and stable workforce is beneficial for everyone.
          Society benefited due to workers having a decent and stable income. They can then buy houses and cars, spend money on services and educate their children.

          • 0 avatar
            namesakeone

            I have a feeling that philosophy ended somwhere around the 1980s, when Phil Knight of Nike showed the world a different business model: third-world employees (with a few highly paid executives and celebrity athlete endorsers) and upper-middle-class customers (plus some urban kids literally willing to kill for Nike’s products) equals high profits. And the customers have to and will come from somewhere…somewhere else.

  • avatar
    ToddAtlasF1

    This is an excuse for tanking their companies in an effort to tank the Trump economy for their global Marxist overlords. Previously they’ve used the shareholders as an excuse to fritter away their market shares and production capacities, but there comes a time when short term gains can no longer mask long-term sabotage.

    • 0 avatar
      highdesertcat

      I think it is just lip-service on the part of Jamie Dimon.

      Shareholders/owners are always the primary and only concern of any business.

      Employees are expendable and easily replaced. If Mgt can’t find labor, they’ll make the other employees work hard/longer. Happens all the time, for more than a century.

      This lip-service costs nothing, buys great PR, makes Management seem warm and fuzzy, but if push comes to shove, who will lose big time?

      You got it. The employees, not the shareholders/owners who have a vested interest in the business.

      Unless they are ESOP shareholders, employees don’t have a leg to stand on, legal or otherwise.

      All this is just “feel” good talk.

      (Oh, remember the $15/hr minimum wage? The figures are just now coming in on how many people lost their jobs on account of that. Let’s ask one of the newly unemployed if they can get by on Unemployment compensation.)

      • 0 avatar
        thornmark

        >>(Oh, remember the $15/hr minimum wage? The figures are just now coming in on how many people lost their jobs on account of that. Let’s ask one of the newly unemployed if they can get by on Unemployment compensation.)<<

        you also don't see the inexperienced young that will never be hired – cos. will avoid them or use "interns". btw. why should Oklahoma have the same min wage as NY? very stupid, but the proponents don't care

    • 0 avatar
      dal20402

      Who do you suppose is the “Marxist overlord” of Tim Cook, CEO of the single wealthiest entity in the world and a near-billionaire himself?

    • 0 avatar
      Lou_BC

      “an effort to tank the Trump economy”

      Globally, various countries have been doing very well LONG before the arrival of DJ Trump.
      Recessions come eventually. Looks like the MAGA Hat crowd is already guzzling the excuse coolaid. DJ Trump spins more “greatest hits”.

      • 0 avatar
        FreedMike

        Seriously, Lou, the idea that a company would break itself to give the middle finger to Trump is either a) a joke, or b) pure tinfoil hat BS – either way, why even respond to that?

        • 0 avatar
          dal20402

          Because the idea of “Marxist overlords” controlling the most powerful people on the planet today is kind of hilarious.

          • 0 avatar
            FreedMike

            No, dal, they’re referring to the little known “Easter Egg” edition of “Das Kapital” – you know, the one where Marx lets on that he was just joking about all that “proletariat” stuff, and admits the real goal was to make the rich folks even richer.

            Did you not read that one? Get with the program, man!

          • 0 avatar
            Lou_BC

            “Marxist overlords” controlling the most powerful people on the planet today

            Alex, I’ll take oxymorons for a billion please!

            Capitalist and autocratic needs to be used instead of “Marxist”.

            Capitalism and its stewards have been attacking anything remotely leftist/socialist since WWII. The populace of the USA has been bombarded with that message and many buy into it to the point where “they” happily allow themselves to get screwed over all in the name of capitalism. BUT “they’ are no longer happy.
            Part of DJ Trump’s spin was that he’s make things right for American workers but chose to blame immigrants, foreigners, and the “elites”. that fits into the unfettered capitalistic model. I do believe that is why capitalists tolerate him. He is a huge orange sideshow clown distraction. In the background trillions have been shifted to their coffers and the middle and lower class is still getting screwed.

          • 0 avatar
            ToddAtlasF1

            Capitalism is just a word used for freedom by people who are trying to take it away. Corporatism is something entirely different.

  • avatar
    cicero1

    These pandering buffoons need a lesson from John Allison of BB&T. Give the looters a penny and they take a dollar.

  • avatar
    schmitt trigger

    Anyone can talk the talk.

    But can they really walk the walk?

  • avatar
    Robotdawn

    Nice PR. That’s all this is.
    Someone up thread said it. Young people want to work at companies that sound nice, and aren’t just hunting for the next dollar. This helps their recruiting of talent. You can tell the economy is doing well and unemployment is low.
    Some customers also think it matters how ‘socially responsible’ a company is when they make buying decisions. These people are naive and have money to burn for feel good exercises, but they are a sizable market.
    Behind closed doors the execs are patting the marketing chief on the back for a job well done and will do business exactly as they always have, or they’ll go out of business.

    • 0 avatar
      Cactuar

      Yep. I was on IKEA.ca recently and noticed the LGBT colored flag. You think IKEA cares about gays, lesbians and gender BS? It cost them all of 25 cents to get someone to put a JPG of a flag there and a cliché paragraph about equality and whatnot. The effort is tiny, but it gives them credibility in the eyes of some consumers. It’s a dishonest marketing exercise (isn’t most marketing dishonest?) yet people fall for it.

      • 0 avatar
        Hummer

        Marketing only effectively works on idiots, which is to say it’s a genius weapon to make big profits on lackluster ideas. People get upset when their poor senses are bombarded with hard choices, a carrot farmer waving a carrot in their face couldn’t possibly be the wrong choice for these people.

        The same people get all upset and go ballistic when they see a black man wearing a confederate shirt or Trump holding a LGBT flag, everything they have been told or marketed is in direct conflict with what they see.

        • 0 avatar
          Lou_BC

          “Marketing only effectively works on idiots”

          Nope… but thanks for trotting out a typical myth.

          Good marketing already knows what their audience wants to see or hear. Your comment is also part of a marketing ploy. “Fake news” is a prime example of the “Marketing only effectively works on idiots” meme. Marketer’s sell the public on “you are too smart to fall for our sh!t” and then slip in the “sh!t” they want you to buy or buy into.

          Don’t forget that politicians and their spokesmen/spin doctors are all marketer’s. Same can be said for CEO pronouncements.

          It has been proven that anyone with education that enhances critical thinking is less likely to fall for marketing. Is that what you are referencing?
          Somehow, I highly doubt it.

        • 0 avatar
          Luke42

          @Hummer,
          “Marketing only effectively works on idiots”

          …Says the guy who has a brand name as his pseudonym.

          Sorry to be that guy, but it’s my day to point out that you’ve clearly bought into the marketing for the Hummer brand to the degree that it literally is your online identity.

          It feels like I’m kicking you in the nuts by pointing this out. But, pointing out the contradiction between what you just said and your avatar is important here. It’s for your own good.

          Brand-advertising (most TV commercials) really is pretty obnoxious and I’d be happy if it went away. But, actual marketing involves finding customer needs and plugging it into a value chain — and that isn’t obnoxious at all.

          Here’s an example of good marketing: You happen to be hungry and have cash in your pocket I help you find restaurant, supplied by farmers local and global. You, and dozens of other people, benefit by taking part in this rather enormous global value chain. And you’re no longer hungry!

  • avatar
    Lockstops

    “Occupy Wall Street may have failed in its primary goal, but the public purview has grown increasingly suspicious of giant corporations with lots of money and global interests. That only worsened as CEO compensation continued to climb. In fact, a study last week stipulated that CEOs have watched their pay grow by 1,000 percent over the last 40 years. They now make 278 times more than the average worker.”

    Are they really increasingly suspicious? I’d think the opposite is happening. Or that ‘the public’ just loves to spew all kinds of BS and then get back to doing the easiest, most short-sighted thing possible.

    Whose fault is it that CEO compensation has skyrocketed? ‘The public’s’!

    People basically worship huge corporations, flock to companies doing well, ‘the winners’, if they get anything free that they want from them (like surrendering all their data and lives to Facebook, Google) or if they get some crap from them a slight bit more cheaply (from companies that produce stuff in China). Therefore competition against them shrivels.
    Companies who tried to keep manufacturing domestic? Gone.
    Companies trying to be honest in their practices? Gone, steamrolled by those stealing all the data from their customers they can and by those who lie in the cleverest ways to make people worship them (like Tesla).

    Then there’s the huge leverage effect from the world becoming overpopulated, meaning that if you make it huge then the money you’re pulling in is massive. Those massive US companies being able to suck in massive revenues from all over the world, especially from weak countries with no-one to curb their ways. Therefore naturally CEO pay is also increasingly more massive, and since ‘workers’ are increasingly exploited Chinese/Vietnamese workers then their pay is lower than before, and domestic workers sure haven’t had their wages increase due to them having to compete with wage levels in criminal countries.

    So no, ‘the public’ doesn’t really care about how badly they make themselves vulnerable to ever fewer and ever more massive and aggressive corporations. They just chase the last dollar from the newest deal. They’re definitely not thinking of long-term purchasing strategy, trying to keep enough viable suppliers in the game in order to not end up reliant on one of them.

    • 0 avatar
      Lockstops

      ‘The public’ is such an excellently intelligent and high-integrity group that they’ve gone straight back to buying Volkswagens from that absolutely corrupt cheater corporation if they feel that the latest BS marketing looked ‘cool’. I mean yeah, who cares that they just cheated all of us, and are still extremelely corrupt. But I guess blaming others is a lot more fun and criticising your own behaviour is less fun so they go for the option that is more fun right now.

      • 0 avatar
        FreedMike

        Well, if nothing else, you just proved that “the market” won’t regulate bad corporate behavior. VW screwed its’ customers over – bad enough, to be sure, but then we have Alaska Airlines, BP, Ford, Union Carbide, the tobacco companies, and dozens of other corporations who flat-f**king-out ***killed*** people and stayed in business.

    • 0 avatar
      Luke42

      No.

      CEO compensation has skyrocketed because corporate boards realized that the best way to make CEO’s favor stockholders in all things is to pay the CEO in stock.

      That way, the CEO effectively gets a raise whenever the stock price goes up. And the stockholders get richer, too. On the surface, it seems like aligned interests and a win/win.

      The problem with this, though, is that the shareholders aren’t the only group with a stake in the future of the company. Customers, employees, suppliers, and others have an interest in the future of the company. If their interests are completely disregarded in favor of stockholders at every turn, we have more vulnerable companies.

      Comcast is a perfect example of this. Their customers hate them, their network service was 1/100th the speed of the local FTTP ISP that I switches to when I dumped them. Their entire existence is predicated on oligopolistic and monopolistic power. If they’d put some of those profits into customer service and upgrading their network, I’d still be a customer. But, they require monopoly/oligopoly power to remain in business — and they know it, and their customers know it, and the instant a serious competitor emerges, they go down like Kodak. But all of this could have been prevented by balancing the needs of customers with those of the shareholders!

  • avatar
    JoeBrick

    Actually, I am guessing that none of these buffoons even read this piece of crap. They probably heard someone make a semi-inspirational speech urging them to “take this opportunity to change the world” or to change the image of international corporations, then they were told where to sign to affirm those lofty goals. Some of them may even agree with all of this BS, but they all know better than to make waves. Like any of them really would. It would be like a member of the Politburo challenging the words of Stalin or Mao or a high-ranking Nazi disputing the words of Hitler. It would never occur to them to do such a thing. These people all got where they are by knowing which side their bread is buttered on.
    “It’s a big club, and you are not in it.”

  • avatar
    raynla

    Something is definitely amiss…
    I’m thinking bankruptcy proceedings or a merger of some type between the two.

  • avatar

    Both Barra and Hackett were under tremendous pressure to thin their respective companies carlines by the share holders, and that is just what they did. They are just wall street puppets. Hopefully, after a strike both will be forced out. Barra has become infamous for cutting corners, which is evident by the cheap interiors of GM’s latest trucks and SUVs.

  • avatar

    I suspect all this is the more sophisticated way to announce coming soon workforce reduction a.k.a layoffs.

  • avatar
    JoeBrick

    Something else just occurred to me. GM, Ford, and the six largest BANKS were among the 181 signers of this so-called ‘declaration’ about the ethics and conduct of corporations. They can see the writing on the wall for the U.S. dollar, the reserve (most stable) currency of the world. (There is way too much debt BY EVERYONE not just us-to EVER be repaid.) This document is intended to tell the Chinese plainly that they are switching allegiance from the dollar to the yuan and that they approve of a giant financial crash/reset. They want to be seen as socially progressive, and signal that they will look the other way from human rights abuses in Hong Kong and China as long as they can virtue signal their moral superiority to the U.S., who they see as seeking a leftist revolution and a revolt against Trump. They are saying that they want to do business in China. Are these 181 corporations saying that they would sell out the American people ? I think so. And I think they are planning together a strategy of massive layoffs, bringing a layoff and bringing down President Trump.

    • 0 avatar
      JoeBrick

      correction- “they are planning together a strategy of massive layoffs, bringing a recession/crash and bringing down President Trump.”

      • 0 avatar
        Lou_BC

        “bringing down President Trump”

        Someone’s MAGA hat is 5 sizes too small.

      • 0 avatar
        Luke42

        @joebrick:
        “they are planning together a strategy of massive layoffs, bringing a recession/crash and bringing down President Trump.”

        LOL, no.

        Even those of who truly despise Trump would not shoot ourselves in the foot (economically speaking) to get him out of office.

        But, honestly, even if I were inclined to do so, I would’t have to. Trump is clueless enough about economics that he shoots the economy in the foot every couple of weeks. This is one of the reasons I despise him.

        The economy staggers on, despite Trump, not because of Trump. Starting trade war with China is pretty much a textbook way to trigger a recession, and I’m surprised it’s taken so long for the effect to hit the headline numbers. Pressuring the Federal Reserve to keep interest rates low (and applying other economic stimulus before the recession starts) pretty much garantees that the recession, when it comes, will be worse than it needed to be.

        Trump swaggers, but he does not think ahead. So, if I were inclined to shoot the economy in the foot to get Trump out of office, all I would need to do would be to remain silent.

        But, those of us who have studied these issues have been telling you guys this stuff since 2016 in the hopes that someone, anyone, will listen. But Trump is smarter than all of the experts, according to himself… [Facepalm]

  • avatar
    APaGttH

    Wow. A bunch of you have your tinfoil hats wrapped on so tight it is cutting off blood flow to the brain. The commentariat of TTAC has fallen a long way from a decade ago.

    A looooooong way.

    • 0 avatar
      krhodes1

      I think some of them have graduated from tinfoil hats to full-fledged tinfoil suits.

    • 0 avatar
      JoeBrick

      You play with mud pies and we play chess. Just go back to sleep

    • 0 avatar
      James Charles

      Well, ever since the mob that owns TTAC bought the Truth About the NRA or whatever the site is called, TTAC has become a turd moving through the S bend.

      Many bloggers here I think only reached the 6th grade.

    • 0 avatar

      Amen to that man. One of my favorite car sites has been overrun by morons. I’d consider not coming here anymore, but it’s interesting to see how the other half “thinks”.

    • 0 avatar
      FreedMike

      Concur completely, APaGttH.

    • 0 avatar
      Lou_BC

      “tinfoil hats”

      Nope they Now are red and have MAGA on the front!

      • 0 avatar
        TheDumbGuy-formerly JoeBrick

        We shall see. I refer to my predictions about the coming global crash/reset. It is generally a bad idea to underestimate the mental capacity of people merely because you disagree with them. You very rarely learn from them that way. Keep an open mind. It may keep you from feeling foolish later. Free advice. MAGA !

        • 0 avatar
          Lou_BC

          @”TheDumbGuy-formerly JoeBrick”

          Please point out where I’ve questioned anyone’s intelligence?

          Just to be clear: intelligence is different than ignorance or willful ignorance. Political ideology i.e. conservative or liberal, isn’t based upon intelligence. Ignorance does play a role to a lesser degree but “willful” ignorance plays a massive role.

          There is evidence that suggests that greater intelligence along with greater knowledge i.e. less ignorance means a person is more likely to be a moderate or more centrist in political ideology. More extreme views, whether right-wing or left-wing, tend to be associated with dogmatism and rigidity, which are more appealing to less intelligent and/or less knowledgeable people.
          I said earlier that enhanced critical thinking makes one less susceptible to marketing, it also applies to making one less susseptible to the extreme fringes of politics.

          • 0 avatar
            James Charles

            Lou_BC,
            I do believe many who comment on TTAC, especially from the Boomers onwards live on the past successes of the US. I can empathise with them, but, they don’t want to be realistic about the future of the US, not that it will be bad. It will be different, with the US influence waning, and its waning at an accelerated pace under the Trump regime.

            Some of the younger MAGA crowd are just young and foolish who lap up the far right crap, as this gives them identity and most likely a feeling of strength and security.

            Many from the UK were the same, even into the 60s. It took many in the UK several generations to realise the UK had become a regional player and leveraged the US to maintain a degree of global reach.

            I can appreciate the far right people are insecure about the future and dream of the past.

            I think this insecurity drives much of the right wing nonsense. Its easy for the less knowledgeable and intelligence challenged to simplify issues and blame, Mexicans, Chinese, Europeans, etc rather than say what do we need to do to right some of these wrongs. So far the tatics emploed by the current guy and his clingons isn’t working, or MAGA.

            Managing the US is complex and complicated, there are no simple solutions or blame and having a moron at the helm is catastrophic for the great US nation.

  • avatar
    Steve203

    Total management BS. Management is blowing smoke to cover up the fact that their earnings prospects stink. US customers are leveraged out of their skulls and can’t keep buying vehicles at the big three’s ever inflating prices, while their big growth engine, China, goes in the tank.

    So management trots out this pap so that, when they lower guidance and miss their earnings numbers, they can say “that’s because we are all about customer and worker satisfaction now”.

  • avatar
    namesakeone

    The Business Roundtable is right in saying that the old (current) way of making sure that the quarterly reports increase into perpetuity is not sustainable, but I think the boards of individual companies figure–naively–that every OTHER company can cooperate, and they can keep demanding business as usual. Peter Karmanos, founder and then-CEOn of Compuware, once told his board that CEO should stand for (wording approximate) “Customers, Employees and then Owners–in that order.” His board booted him from the company.

  • avatar
    James Charles

    The Big 3 are reliant on protected and subsidised large vehicles that are pretty much valueless outside of the US.

    The auto business will drop off, even trucks (real trucks, not pickups and SUVs) are having a hard time selling in the US. The trucking industry is falling off a cliff, lack of work.

    This will filter down and the Big 3 have leaned operations slowed down producing small vehicles. I think the Big 3 are trying to reinvent and reassure the public all is not lost as the perception they want to create is they are moving in a more responsible direction.

    We’ll have to wait and see if their plan has worked.

  • avatar
    tylanner

    Pulled kicking an screaming….

    This is simply a hedge against an Elizabeth Warren presidency…but she’ll not be so easily satisfied….

  • avatar
    Daniel J

    I’m going to laugh when people stop investing into these companies because of statements like this.

    There also seems to be a failure in understanding that *anyone* can buy stock into these companies. So the railing against shareholders wanting to make money is also a railing against much of the middle class who have shares of their own or through 401Ks into these companies.

    I think a better way to do this is that instead of some public stance by these companies is to educate shareholders on the long return value of doing better business practices and having better trained, better paid, and more content employees compared to short term quarterly profit analysis. Show the shareholder that there is a way for them to make money long term instead of throwing them under the bus.

    I’ll also agree that CEO pay is rather high especially for these corporations. The corporations need to stop chasing that golden goose.

    • 0 avatar
      namesakeone

      I think you nailed it, albeit offhandedly. You’re right that now, anyone can invest in the stock market–and many average citizens do, through retirement plans. I would venture that most who buy (relatively few shares of) individual stocks are intent on keeping them long-term–and having them become their retirement nest-egg. But many of those that can and do invest in massive amounts of stock–and the ones that hold influence with the boards of directors–do so with the intent of making a very quick, very large profit. They do that by pressuring the company to take actions like stock buybacks (instead of investing in R&D) and unloading highly-paid employees (in favor of inexperienced, cheaper ones). All of which drive the share price in the short term, which is all the massive investor cares about *they will sell before the consequences become apparent), but frequently damages the company’s future. Unfortunately, the sheer number of shares these people (or organizations) possess ensures that the CEO will listen to–and obey–them.

      • 0 avatar
        Steve203

        >>They do that by pressuring the company to take actions like stock buybacks (instead of investing in R&D) and unloading highly-paid employees (in favor of inexperienced, cheaper ones). All of which drive the share price in the short term, <<

        CEOs do the same to line their own pockets. Consider Jim McNerney, Jack Welch protege, who became CEO of Boeing. He took a fully funded pension fund and ran it into a $20B deficit, he took a financially sound company and piled up debt and ran shareholder equity to zero, all to buy back stock, to push the price up. Under McNerney, the 737 update was done on the cheap, reusing a 50 year old airframe, instead of an up to date design, because it was cheap. A lot of the engineering and software code was taken away from Boeing's experienced people and outsourced, because it was cheap. So they wound up with a plane that was inherently unstable, so they used an electronic bandaid, and made that on the cheap too, so there was no redundancy. So, when the cheap electronic bandaid failed, two planes augered in, killing everyone on board. So now they are trying to fix the bandaid, because the plane is still unstable. They don't have a choice, because they spent all their money buying back stock. Boeing doesn't have the $30B to do a proper job of designing a replacement for the 737.

  • avatar

    Go woke, go broke.

  • avatar
    danio3834

    Damn, my Social Credit Card appears to be maxed out…

  • avatar
    tomLU86

    I’m still waiting for Bloomberg, or the NY Times, or even the TTAC to report on:

    Auto company CEO compensation and how it relates to auto company profits, both in absolute terms, and as a percent of revenue.

    We all know how ‘pricey’ North American workers have a hard time competing with ‘low cost’ Mexico and China.

    How do we explain the Detroit Three CEO and exec compensation compared to Toyota? Honda? Subaru? Even the top three German companies? Hyundai?

    Maybe GM and Ford should replace Barra and Hackett with some one from Toyota and/or Honda. They would certainly cost less.

    • 0 avatar
      highdesertcat

      CEOs get paid what they are valued at in the market place. This goes for all disciplines.

      In a Capitalist society, the bidding war for the top dogs is always on. That’s why companies use “Contracts with clauses” to hold on to their top people.

      If a CEO does not live up to the Board’s expectations and the company’s bottom line for the shareholders, they get canned.

    • 0 avatar
      TheDumbGuy-formerly JoeBrick

      When Daimler-Benz bought Chrysler, they were shocked to find out that Chrysler execs were paid ten times as much as Daimler-Benz execs. That destroys this-
      ” CEOs get paid what they are valued at in the market place. This goes for all disciplines.”
      Chrysler was the company that was in trouble.

      • 0 avatar
        highdesertcat

        It goes for ALL disciplines in Capitalist AMERICA whether that be the auto industry, big Pharma, Healthcare, Aviation, whatever.

        If a person does not get paid what they’re worth where they work, they should seek work elsewhere.

        Who cares about Europe, Asia, or the Middle East? If people work there, let it be their concern.

        In America, the amount you get paid, the amount you are worth, determines your social status. Get paid a lot, rise to a higher status than someone who gets paid less.

        If worker bees want to get paid as much as their CEO, let them get the education and experience to rise to that level.

        Better yet, let them become self-employed.

        I was for 30 years, after I retired from the military. And it is TOUGH to make ends meet, and to make payroll, and hard to find people that actually WANT to work.

        The list of complaints is longer being self-employed than it is being an employee of some CEO who got his the old fashioned way, by working for it.

  • avatar
    Lou_BC

    @”TheDumbGuy-formerly JoeBrick”

    Please point out where I’ve questioned anyone’s intelligence?

    Just to be clear: intelligence is different than ignorance or willful ignorance. Political ideology i.e. conservative or liberal, isn’t based upon intelligence. Ignorance does play a role to a lesser degree but “willful” ignorance plays a massive role.

    There is evidence that suggests that greater intelligence along with greater knowledge i.e. less ignorance means a person is more likely to be a moderate or more centrist in political ideology. More extreme views, whether right-wing or left-wing, tend to be associated with dogmatism and rigidity, which are more appealing to less intelligent and/or less knowledgeable people.
    I said earlier that enhanced critical thinking makes one less susceptible to marketing, it also applies to making one less susceptible to the extreme fringes of politics.

  • avatar
    Jeff S

    @James Charles–“The auto business will drop off, even trucks (real trucks, not pickups and SUVs) are having a hard time selling in the US. The trucking industry is falling off a cliff, lack of work.

    This will filter down and the Big 3 have leaned operations slowed down producing small vehicles. I think the Big 3 are trying to reinvent and reassure the public all is not lost as the perception they want to create is they are moving in a more responsible direction.”

    Agree, I have thought this for a long time. Record sales of new vehicles for the past decade cannot be sustained indefinitely. Many put off purchases of new vehicles during the Economic Crisis of 2008 and many of those have now bought new or newer vehicles. At the same time the manufacturers realize that good times for ICE vehicles will not last indefinitely and due to Government Regulations and changing consumer preferences the manufacturers have to prepare for the future. That is one reason for the investments in electric cars and in more support for stricter efficiency. The auto manufacturers are not anti Trump or really anti any political leader they are more concerned on long term standards after Trump and after most of the present political leaders are gone. It is a bigger headache to have varying standards among developed countries than to have a few standards that the costs can be spread out among more products. It likely will reach a point where making ICE vehicles are no longer profitable. Battery technology could eventually reach the point of becoming more affordable with more infrastructure. I don’t see this happening in the near future but this could happen in the next 20 or 30 years.

    @Lou_BC–I have always been more of a centrist and I believe most people to varying degrees are more moderate. I don’t know everything and I learn something new everyday. Anyone who is not willing to learn something new might as well be dead.

  • avatar
    namesakeone

    The Business Roundtable releases a statement that shareholder primacy should not be the only concern of business, and 181 major companies agree. Four days later, David Koch, a major shareholder in many companies, dies. Coincidence?

    • 0 avatar
      highdesertcat

      David Koch died after a long battle with cancer. He will be remembered by many as a great man who had America’s best interest at heart.

      • 0 avatar
        ToddAtlasF1

        Who are those people? I’ll remember him as one of the people who used the Republican party to prevent conservatives from ever having a voice in governance.

        • 0 avatar
          highdesertcat

          I thought it was George Soros who advanced the ‘crat cause hampering conservatives from ever having a voice in governance, while the Koch Brothers were widely condemned by the Left for their right wing political sponsorships, even though the Koch Brothers donated to BOTH political parties.

  • avatar
    Jeff S

    highdesertcat you are correct the Koch Brothers more to the Right and Soros to the extreme Left.


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