There is a movement in business today to put “stakeholders” at the forefront of a business’s thought. But it doesn’t take too much thought to imagine how that would dry up investment as shareholders would look to put their money where it’s treated best. JP Morgan has championed the stakeholder approach in the past, but when it came time to make a real decision, it chose long-term viability over the short-term public relations benefits of the “stakeholder” approach. Ross Kerber reports:
JPMorgan Chase & Co CEO Jamie Dimon has led calls for companies to consider the needs of workers, communities and customers as well as those of shareholders.
But now it is clear: investors come first.
That is how activist investor John Harrington interprets a recent decision by JPMorgan’s board – chaired by Dimon – not to convert itself to a “public benefit corporation,” a Delaware legal structure gaining attention among would-be financial reformers.
JPMorgan’s board cited a legal review it commissioned stating, among other things, that when the interests of stockholders and other constituencies conflict at a corporation like JPMorgan, “the board’s fiduciary duties require it to act in a manner that furthers the interests of the stockholders.”
That would not be the case for a public benefit corporation, however. Directors at such companies must balance stockholder interests with the interests of other constituencies, according to the review sent to shareholder Harrington, who had requested it.
Harrington said the document’s details and the board’s decision show the limits of the sentiments espoused by Dimon and other top CEOs when they issued their “Statement on the Purpose of a Corporation” in 2019 calling on companies to look out for all stakeholders.
“What they said was meaningless,” Harrington said in a telephone interview.
A JPMorgan spokesman declined to comment.
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