The Business Roundtable, a non-profit whose membership is comprised of chief executive officers of major American companies, released a statement this week declaring that its members would no longer place shareholder’s interests above those of their employees, customers or society at large.
General Motors CEO Mary Barra, along with Ford CEO Jim Hackett and the CEOs of six of the world’s largest banks, were among those who signed the statement.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the Business Roundtable said in the statement released this week. “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity.”
The corporate governance principles of the Business Roundtable formerly indicated that the sole purpose of a corporation was to serve its shareholders but it now says that “the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.”
Experts aren’t buying it, however. The Los Angeles Times talked to Chris Osgood, a propaganda expert and history professor at Colorado School of Mines, who said that it “seems pretty obvious that CEOs are trying to head off growing public pressure on a number of fronts,” with this statement, such as rising executive compensation.
Another propaganda expert, Nicholas J. Cull, professor of public diplomacy at USC, said the Business Roundtable’s statement seems to suggest that “the business community is expecting blowback from their policies,” and they are now trying to get ahead of it.
A study conducted by the Economic Policy Institute released earlier this year indicated that compensation for America’s top CEOs increased 940% between 1978 and 2018, while the average worker salary rose 12% over the same 40-year period. Wage growth of very high earners in that period rose about 339.2% during that time.
“Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with” the EPI said in a statement. “CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or taxed more).”
One business expert that spoke to The Los Angeles Times said there may be some sincerity in The Business Roundtable’s letter, though, saying that having such a statement on record can help shape the way the company is run going forward.
“This is how you shape corporate culture,” UCLA law professor Adam Winkler told the newspaper. “I think there is a measure of sincerity here.”
Comments
GM care about employees over stock prices? Believe it and I’ve some great beachfront property in “South” Detroit to sell you!
Hey my cousin is a real-estate agent in Windsor (aka “South Detroit”). So he might be interested.
Maybe I should have said beachfront property on the Rouge river!? Windsor isn’t that bad..
GM care about the customer over stock prices ? Believe it and I have some great beachfront property in South Dakota to sell you !
What a hypocrite.
Lets see some of the “ethical decisions” Machete Mary has made…..
Using tax cuts to buy back stock to artificially prop the share price…
Firing 15,000 employees and having salaried folks take “the walk of shame”…
Causing upheaval and separation of numerous families….
Creating economic havoc to cities like Lordstown…
Giving customers the cheapest interiors to save a buck…
Yes, this sounds like the makings of an ethical company taking into account the needs of all its stakeholders.
Try riding a bike safely through Warren Michigan.
So, I’m curious. What do these “propaganda experts” feel would be a reasonable salary for the head of General Motors? She made $21.87 million in 2018 (a decrease from $21.96 million in 2017). Typically, that includes some stock compensation that only does well if the company share price increases. GM has 173,000 employees. So a $1 million decrease in her salary would equate to a raise for every employee of $5.78 – per year. Even if you reduced her salary by $20 million, it would amount to a whopping $115 (or about $80 after tax) for each employee. Not exactly going to put a dent in the old income inequality equation.
I have no problem with a CEO making huge salaries IF all the stakeholders are being taken care of as Machete Mary things GM is taking care of theirs. The problem with Barra is that she is taking that high salary while she cut 15,000 jobs in midst of record profits. Lordstown has been an ongoing story and will be for the foreseeable future. Those stories make GM look pretty damn bad as they should. Barra is viewed as a greedy and morally bankrupt CEO that is just looking out for her own good. The signing of this worthless document is just another PR move by GM to control the damage Barra created in the public eye.
True, but not the point.
GM constantly whines that US wages are high and compares pay to the other car companies and parts of the world. The US worker wage has stagnated while upper ‘mismanagers’ pay explodes.
So why doesn’t GM apply this ‘compensation control’ to ALL employees including herself.
Barra has the top auto ceo pay. She makes, not earns, much more than the leaders of Toyota and Honda. Maybe someone has the actual numbers but I have seen she makes about 5 times the rate that foreign ceos make.
It’s true GM does care about it’s employees. Starting with the chairperson of the board, and then the CEO. And so on down the ladder. And every step down the ladder they care a little less. Until gets to the people that actually do the work, and then their give a fuck is all used up.
You forgot how Machete Mary cares about the children too! Remember the condescending and patronizing letter the GM PR department wrote on her behalf to the students of Lordstown who were begging her not to take their parents’ job away?
http://gmauthority.com/blog/2019/02/gm-ceo-mary-barra-pens-letter-to-students-affected-by-lordstown-plant-idling/
Anyone that has worked for GM know that if leadership is talking, they are lying. Here is more proof. A few months ago they ‘unallocated’ plants in the us while importing more vehicles from Mexico Korea and China. My job was moved to Mexico. The Unallocated term was used to screw the employees they love so much out of agreed contract benefits such as early retirement for plant closure.
Apparently enough people are fed up of the GM deception and half truths they dreamed up this crap to try to save face. To little to late.
Billions of stock buybacks and record ceo pay tells the truth.
Mary Barra has mastered the art of impression management. She is very book smart on saying the right things and using PR to her advantage along with that fake smile she is always wearing. She is a true Machiavellian leader doing and saying anything that will advance herself while the very foundations of the company are cracking by her poor decision making.
“I make more shaking your hand for this photo op than you’ll make all day. Say Cheddar.”
Try making more than you’ll make in a year.
Anyone that has been following GM this last year can see that this statement is the complete opposite of what they have been and still are doing. What balls she has to even say that.
Company and ‘leadership’ greed has gotten to the point of being obscene.
Lordstown was ‘closed ‘ because production was offshored. Period.
Bargaining with UAW will show very soon if there’s even a slight hint of what this BS document claims. I won’t be holding my breath. The economy is grinding to a halt. These CEO’s may be finally seeing that and MAYBE a little wee tiny bit scared their growth numbers will plummet. They caused it. They have the power to fix it. Only time will tell if they have the foresight and the gonads to actually do so.
Ex GM Customer for life, Lordstown closed because not because production was offshored, but because some of the public in the US is believing greatly that Sedans are dead and no one is buying them. The Cruze is still being built in Argentina (GM Rosario) because the manufacturing leaders in the Mercosur region are standing for what they believe is good for the community, for the employees and the customers as they showed with big numbers that the Cruze is a good seller down there and the customers like it a lot. It is actually an expensive car but it is an aspirational car.
Even Opel, when not part of GM any longer is still making the Opel Astra (twin brother of the Cruze) in both configurations (Sedan and Hatch) because it is a very good car that people like.
In summary, they are good sales people and they respect the customer above all. They do not try to ram through the public’s throat everything that has being said in this forum for quite some time: options, packages and nonsense goodies that nobody wants.
I have said it before: the US is still buying 4.5 million sedans per year (15M sales a year x 0.36 of market penetration) and that means that 15 plants producing sedans at a full rate of 3 shifts from Monday thru Saturday are dumping sedans in the US market. Why the Lorsdstown plant could not been one of those 15? GM could not sell it because of a very poor marketing strategy and even poorer sales people that only care about selling trucks, pursuing a good sale commission for every truck they sell. Equation is simple. Period.