Why 181 CEOs Just Lied to Americans About Shareholder Value

JP Morgan Chase CEO Jamie Dimon

According to the CEOs of nearly 181 major U.S. corporations, “shareholder value” is no longer their main objective.

The Business Roundtable, a group of America’s top CEOs, issued a statement saying so on Monday.

It’s part of a new school of thought that’s become increasingly popular since Jaime Dimon, JP Morgan Chase’s CEO, voiced concerns over the current model adopted by most publicly traded companies.

Instead of maximizing profits, the Business Roundtable’s memo suggests that CEOs now want to shift their focus to delivering value to customers, investing in their employees, and dealing ethically with suppliers while simultaneously supporting communities.

And to absolutely no one’s surprise, the media ate it up. Finally, evil corporations will give back to the millions of Americans they crushed under their heels on the path to unfathomable wealth.

But the truth is, this morning’s statement from The Business Roundtable is 100% lip-service. It’s an insincere promise to the “little people” that the big, bad CEOs are changing their tune.

As if they needed to.

Don’t forget that real unemployment is the lowest it’s been since December 2000 and the economy is still strong despite an ongoing trade war – both things you can thank corporate America for.

But now, goodwill has swept board rooms across the country. Executive officers and bean counters will prioritize people, not profits, in pursuit of sustainability.

“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” said Dimon, who serves as the chairman of the Business Roundtable.

News flash, folks:

“Investing in workers and communities”, as Dimon puts it, is something corporations have always done. Same with delivering value to customers.

If companies didn’t do those things, nobody would work there. Moreover, nobody would buy their products – they’d simply go to a competitor.

Dimon says that by focusing on employees, customers, and the outside community, they’re sacrificing profits.

In reality, those three components are the biggest contributors to long-term success for a company, which is without a doubt the number one driver of shareholder value.

The statement from the Business Roundtable makes it seem like CEOs can just wave a magic wand and “maximize profits” at the expense of their employees and customers. Doing so might boost profits for a single quarter, but in the end, it would greatly impact a company’s long-term viability.

Investors would be able to see through that 100% come earnings season and share prices would get immediately crushed as a result. In the months that follow, they’d continue to drop as customers and employees flee in droves.

So, when 181 CEOs say that they no longer consider shareholder value a priority, I call shenanigans.

They absolutely do and will continue to do so.

In their statement, they still claim to value all the things that directly contribute to long-term prosperity, which impresses investors and causes share prices to rise.

What they’re really doing this morning is attempting to save face. The media has Americans convinced that CEOs are responsible for their problems, and if we could only convince them to be less greedy, everyone would be better off.

Upon hearing the sharpening of pitchforks off in the distance, concerned members of the Business Roundtable decided to get out in front of the issue by releasing a statement.

One that, more than anything, should leave Americans feeling insulted. Not just because they lied to us, but because they assume we’re dumb enough to believe it.

And based on the reaction their new stance is getting from people, it looks like they might be right.


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