Shareholder value

18/5/2018

'Shareholder value' is the mantra of companies, to be enhanced and protected. This is the board's legal obligation.

How this is usually interpreted it seems to me, is through a narrow focus on immediate profits and dividends. And achieved through risky acquisitions, sacking of staff to achieve higher productivity, replacement of higher paid employees with less experienced and 'cheaper' minions, outsourcing or subcontracting. Not to mention illegal behaviour- as exposed with the banks in Oz .

Behaviour such as this is shortsighted, exploitative and can be disastrous for companies' long term survival and financial health. Such a contrast to Germany's 'mittelstand' companies.

So how refreshing to read an article (The Daily Telegraph 8 May 2018) by the leader Phillip Ullmann, of a company, the Cordant Group, with an annual turnover of £850 million.
   •  executive salaries are capped at 20 times the salary of the lowest paid employee
   •  dividends are capped
   •  profits are shared with workers

"The days of companies driven by 'shareholder value' and nothing else are over.....The Companies Act should be revisited, made broader to ensure that the interests of company's stakeholders should rank alongside shareholder value in executives' decisions."

Further reading : https:/www.pioneerspost.com/news-views/20170913/cordant

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