Too Many See Becoming the Boss as “a Prize, not a Responsibility”

At a moment when banks are wobbling again and political uncertainties mount, the board has to hold its nerve. It also needs to keep focused on its purpose: to help steer the company towards sustainable, long-term success. A conference last week in Brussels sought to underline this point. It was the culmination of a two-year programme of seminars and roundtables called “Purpose of the Corporation”. The project was co-ordinated by Frank Bold, the law firm. The thoughts and contributions culled from more than 260 of its participants have been written up in a final report . A key proposal is that businesses should “embed a clear statement of purpose and corresponding rights and responsibilities of directors, shareholders and other stakeholders in governance documents and articles of incorporation”. This is clearly a broader concept of the purpose of a public company than that embodied in the phrase “maximising shareholder value”. Yet this narrower view is still the prevailing conventional wisdom in many parts of the world. Grown-up businesspeople will look you in the eye and declare, in all seriousness, that “fiduciary duty” is essentially a question of the share price and dividends. This is an inadequate and damaging view. But as the report points out, the attempt by both boards and shareholders to adopt a broader concept of fiduciary duty “is undermined by the prevailing corporate governance model”. (FT)

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