The organization representing the nation’s most powerful chief executives is rewriting how it views the purpose of a corporation, updating its decades-old endorsement of the theory that shareholders’ interests should come above all else.
The new statement, released Monday by the Business Roundtable, suggests balancing the needs of a company’s various constituencies and comes at a time of widening income inequality, rising expectations from the public for corporate behavior and proposals from lawmakers that aim to revamp or even restructure American capitalism.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” reads the statement from the organization, chaired by JPMorgan Chase CEO Jamie Dimon.
The new statement comes more than two decades after the lobbying group, in a 1997 document about corporate governance principles that it has periodically updated, took an explicitly shareholder-first stance. “The Business Roundtable wishes to emphasize that the principal objective of a business enterprise is to generate economic returns to its owners,” it wrote.
The new statement comes as the gap between the compensation growth of corporate executives and American workers has grown at staggering rates. An analysis released Aug. 14 by the Economic Policy Institute, a left-leaning think tank, found that chief executive compensation had grown 940% since 1978, by one measure, while typical worker compensation had risen just 12% over the same period.
Corporations are facing increasing pressure — whether from customers, employees or public groups — to take stands on issues that impact society at large. Tech companies have had employees push back against contracts with immigration and border control agencies. Senior corporate leaders have been increasingly vocal on social issues ranging from racism to LGBTQ rights as consumers increasingly look to spend money with companies that share their views.