This talk critically examines the power of corporations, the myth of shareholder value maximisation and the future of corporate governance. Designed by Susanna Arús, Communications and Events at Frank Bold

1. Purpose of the
Corporation Project
Paige Morrow
www.purposeofcorporation.org
@purposeofcorp

2. Discussion points
1. The power of corporations
2. The myth of shareholder value maximisation
3. The future of corporate governance
Name of presentation 2

3. 1. The power of
corporations

4. Stacy Innerst/Post-Gazette

5. 5

6. 2. The myth of
shareholder value
maximisation

7. 7
“The relationship between the shareholder and the firm is a
contractual relationship (…) The fact you own Apple shares
doesn’t mean you can walk into an Apple store and take an
iPad.”
Lynn Stout, Professor at Cornell Law School
“Short-termism, or myopic behaviour, is the natural human
tendency to make decisions in search of immediate gratification at
the expense of future returns, decisions which we subsequently
regret”
John Kay, well-known author and economist

8. 8

9. Profit distributed to shareholders in the UK:
In 1970, £10 of every £100
Today, £70 of every £100
9
CEO pay was 204 times
that of an average worker
in 2004 (US)
US public listed companies 2004 – 2013:
51% use of net income for stock buybacks
35% for dividends
14% for other purposes – R&D, salaries, innovation…

10. Side effects
10
Human Rights
Rana Plaza
factory collapse
Transparency
Panama Papers
and LuxLeaks
Sustainability
BP’s Deepwater
Horizon oil spill

11. 3.The future of
corporate governance

12. 12
Creation of real value for customers,
shareholders, employees and society
Company is run
with purpose
Objectives included in business
strategy, properly monitored
and incentivised
Diverse board composition with appropriate
skills, experience and independence
Board is guiding company towards
responsible resource consumption
Anticipation of challenges
and opportunities
Oversight to ensure high
environment, human rights, labour
and tax standards
Transparent, democratic and
accountable leadership

13. How to build a responsible corporate framework
→ Embed purpose in governance structures
→ Strengthen the role of the board & clarify fiduciary duties
→ Revise incentive structures for directors and executives
→ Engage stakeholders in corporate governance
→ Improve long-term sustainable investment
→ Review corporate accounting and reporting models
13

14. www.purposeofcorporation.org
@purposeofcorp