Semafor, September 7, 2023, article:"CEOs promised a new era. Little has changed." [Observations of corporate practices supporting stated policies]

Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

This public program was initiated in collaboration with The Conference Board Task Force on Corporate/Investor Engagement and with Thomson Reuters support of communication technologies. The Forum is providing continuing reports of the issues that concern this program's participants, as summarized  in the January 5, 2015 Forum Report of Conclusions.

"Fair Access" Home Page

"Fair Access" Program Reference

 

Related Projects 2012-2019

For graphed analyses of company and related industry returns, see

Returns on Corporate Capital

See also analyses of

Shareholder Support Rankings

 
 
 

Forum distribution:

Observations of corporate practices supporting stated policies

 

For other recent observations of evolving corporate leadership responsibilities, see


Source: Semafor, September 7, 2023, article

INTELLIGENT § TRANSPARENT § GLOBAL


 

  Liz Hoffman


Updated Sep 7, 2023, 1:42pm EDT BUSINESS


CEOs promised a new era. Little has changed.


Reuters/Pool/ABACA

 


Title icon THE SCENE

Little has changed four years after the CEOs of America’s biggest companies promised a more egalitarian approach to business, according to a Semafor analysis of corporate filings.

The splashy 2019 commitment from the Business Roundtable and its 181 CEO signatories redefined the “purpose of a corporation” as more than just a blind pursuit of profits.

Yet corporate spoils are still shared overwhelmingly with shareholders, not employees. While executive compensation wasn’t specifically called out in the pledge, CEO pay has continued to soar, outpacing raises handed out to hourly workers, less out of generosity than a post-pandemic scramble to hire workers.

In 2018, the year before the BRT made its commitments, the average CEO made about 140 times what his or her average worker took home. Last year, that ratio was 186 to 1.

Among the BRT’s 20 largest firms, CEO pay has risen from 324 times that of the median worker in 2018 to 441 times in 2022.

Twelve of them spent more of their free cash flow last year buying back stock than they did five years ago. Six, including Exxon, Procter & Gamble, and Coca-Cola, spent less on physical investments and technology in 2022 than in 2018, despite soaring profits. Six now have lower ESG scores from S&P Global than when they signed the BRT statement.

The Business Roundtable meets next week in Washington with a more earthly agenda as corporate bosses worry about rising tensions with China, push for reforming the permitting process for big infrastructure projects, and lobby for retaining expiring tax benefits.


Title icon LIZ’S VIEW

I think CEOs mostly meant it in 2019. Their failure to follow through says a lot about the cold wind that’s swept in the past two years through a business community that is desperate to drop the do-gooderism, quit getting yelled at by Vivek Ramaswamy, and get back to business.

Larry Fink has dialed back the ESG talk after becoming a target of conservatives. Salesforce ditched its “wellness culture” for one of “high performance,” and CEO Marc Benioff has stopped touting his liberal politics. At Davos this year, executives were largely absent from the conference’s virtue-signaling, Ukraine-toasting, turnip-juice-guzzling mainstage, packing their schedules instead with client meetings in cloistered hotel suites.

Marc Pritchard, Procter & Gamble’s chief brand officer, said last year that companies have “gone a bit too far into the good” at the expense of growth, and entrants at this summer’s Cannes Lions advertising awards were advised by one juror to dial down the politics and focus on “selling shit.”

A development that feels closely related: Nearly a third of those who joined companies in diversity-related roles after the 2020 death of George Floyd — which spurred a flood of statements and new goals from big companies — have already left, according to Live Data Technologies, which tracks employment trends.

The corporate softening of the 2010s, when CEOs set diversity goals and shared dog photos on Instagram, feels like a relic. It was hustled along by the #MeToo movement and hit a gauzy peak during 2020, with the pandemic and widespread racial-justice protests. A wave of anti-Asian violence and Russia’s invasion of Ukraine were also morally unambiguous issues on which to take a stand.

But today’s questions are more deeply divisive — see: Bud Light boycott— and CEOs are all too happy to stick their heads back below the parapets.


Title icon ROOM FOR DISAGREEMENT

The S&P 500 ESG index, which excludes about a third of the S&P 500 index for one unsavory practice or another, has beaten the market each of the past four years, so there’s clearly value in standing for something.

And over the past few months, companies have trimmed buybacks in favor of physical investments, suggesting a longer-term view of value.


Title iconNOTABLE

  • “When did Walmart grow a conscience?” The Economist on corporate makeovers that would make “Milton Friedman turn in his grave.”
  • The BRT’s 2019 manifesto that started it all.


© 2023 SEMAFOR INC.

 

 

This Forum program was open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the purpose of this public Forum's program was to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant was expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated in 2012 in collaboration with The Conference Board and with Thomson Reuters support of communication technologies to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices. The website is being maintained to provide continuing reports of the issues addressed in the program, as summarized in the January 5, 2015 Forum Report of Conclusions.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to access@shareholderforum.com.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.