Time - INT (2022-05-23)

26 TIME May 23/May 30, 2022

BUSINESS

The limits of

CEO activism

BY ALAN MURRAY

VOTING RIGHTS

Companies have values. That is one of the fun-

damental premises of the stakeholder- capitalism

movement. And employees expect their CEOs to

stand up for those values when needed.

But recent debates in the U.S. over voting

rights have challenged that approach. Before the

2020 election, hundreds of CEOs signed state-

ments saying every American should be encour-

aged to vote. After the election, however, as

GOP- leaning states passed laws that would make

voting harder for some, business leaders began

to waver. It’s not hard to appreciate why. As voter

access became a fl ash point for fi erce partisan

debate, corporate leaders were understandably

loath to abandon a Republican Party that had

traditionally looked after their interests and tie

themselves instead to a Democratic Party that is

increasingly challenging capitalism itself.

So how do CEOs stand up for the principle

of voting without taking sides in a political dog-

fi ght? No corporate leader I know of has yet

found a satisfying answer to that conundrum.

CEO PAY

Over the course of the past half- century, CEO pay

has skyrocketed. The average CEO at one of the

top 350 companies today makes more than 300

times the salary of the average worker—10 times

more than a half- century ago. Most of that rise

has been the result of increased stock-based com-

pensation. And many shareholders have been

happy to pay the bill, since it occurs only if their

own investment earnings are also rising.

But the whole idea of “stakeholders” is to

reach beyond just shareholders. The vast gap in

compensation is seen by many as a symptom of

unsustainable inequality.

FIFTY YEARS AGO, the economist Milton Fried-

man famously declared that “there is one and

only one social responsibility of business: to use

its resources and engage in activities designed

to increase its profi ts.” Even today, many busi-

ness leaders argue their pursuit of social goals is

in line with Friedman’s dictum. In the long run,

they say, taking care of your workers, producing

quality products and services, and looking after

the planet will increase a company’s earnings.

But there are times when trade-off s occur be-

tween a company’s profi ts and society’s needs. If

corporations are going to maintain the trust nec-

essary to address our toughest problems, they’ll

need to do a better job tackling those trade-off s.

Murray is CEO of Fortune Media and author of the

new book Tomorrow’s Capitalist: My Search for the

Soul of Business

CAN CEOS RUN THE WORLD? AND WILL THE
world allow them to? That has become a central
question of our times, as leaders of Big Business
step up to address some of society’s most press-
ing problems. Consider:
A majority of Fortune 500 CEOs, according
to Fortune’s latest polling, have now committed
to, or are planning to commit to, the U.N. goal of
reaching net-zero carbon emissions by 2050 or
sooner. Combatting climate change, a complex
undertaking once seen as primarily a government
challenge, has moved solidly into the C-suite.
Most large companies have set clear targets
for diversity, and many are engaged in eff orts to
promote social justice. Training has become a
mantra at many of the best companies, not just to
upskill existing workers, but also to increase mo-
bility and reduce inequality in society at large.
Perhaps most dramatically, CEOs this year
moved into geopolitics. Corporations became
frontline troops in the eff ort to roll back Vladi-
mir Putin’s invasion of Ukraine, with hundreds
voluntarily cutting their businesses in Russia.
As CEO of Fortune Media, I have talked with
hundreds of CEOs about this change, and ques-
tioned them about why it is happening and
where it is leading. Those conversations have
convinced me that something very real and du-
rable is under way. But they also left me with
a sense that “stakeholder capitalism” still has
some critical limits. On a handful of issues where
social and business needs collide, these leaders
are at a loss. Among those are the following:

TAXES
The corporate world has spent decades building
elaborate arrangements designed to drive down
tax bills. It’s a global game, with large corpora-
tions hiding assets in low-tax countries and lob-
bying legislatures to adopt tax bills that suit their
interests. The eff ectiveness of those eff orts is
captured in a single statistic: in the U.S., corpo-
rate tax revenue as a share of GDP has dropped
from 7% at the end of World War II to 1% today.
Only recently have some companies begun to
ask the question that true stakeholder capitalism
demands—not just “Is this tax maneuver legal?”
but “Is this moral?” Taxation is one of the most
important ways companies contribute to society.
Until they repurpose their tax warriors, stake-
holder capitalism will remain under a cloud.

BOB CHAPEK

DISNEY

An employee

uproar led the CEO

to publicly slam

Florida’s so-called

Don’t Say Gay law.

KEN FRAZIER

MERCK

In 2017, the

then CEO led a

movement to quit

a Trump White

House advisory

council.

ED BASTIAN

DELTA

After 2018’s

Parkland

shootings, the CEO

ended a discount

program for NRA

members.

EXECUTIVE

ACTION

THE VIEW

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