As a CEO of a publicly traded company, you would think you’re advised to keep the company on the same page and bound to any discipline. But that’s not often the case. While every company has to operate as a business, some try to act as an industry group. And sometimes, its the CEOs who don’t measure up.
Take Best Buy, a company that is making considerable gains for investors and its shareholders. It is, at first glance, a postmodern company. It is a company that does have some organizations that are decidedly opposed to the free market, like the American Federation of Teachers and its member K-12 public school teachers. But most employees and business partners are team players, supportive of a more free market economy. It’s a rather benign approach, even if business practices from other areas of life, such as today’s politics, don’t always follow in a metaphorical sense.
Whew! That came out a little messy.
Wasting no time, Mr. Joly then went on to talk about a radical change to corporate governance. His goal was to have management, especially in public companies, decide not to pass judgment on outside entities. The idea is to have investment and shareholders become more activist in their decision-making and “engage in the shareholder value discussion,” Mr. Joly said.
It’s what Mr. Joly calls a “dual bequest” approach. One may be the company’s need to use political and social capital to defend itself and save money. The other can be that “our shareholders’ view is best served by an alignment of asset-centric investments … and having the ability to influence the capital allocation process, including proper balance between investing in the business and returning surplus cash back to shareholders.”
Giving the army of “shareholders” the reins isn’t a new thing. Today, it’s more common than ever to have a director put in place, or hold a proxy, in opposition to the corporate board’s wishes. But it’s hard to say if Mr. Joly is exactly following a “usual” model of a company, or if he’s doing something different. The biggest difference is the use of the word “activist.” It appears that he may be utilizing corporations’ conservative tendencies to debate shareholder interest and “align capital allocations with the benefit of shareholders.”
That’s something that would make economic experts all over the world envious. Can we say the “same old” model is working? Not to everyone, but to a significant number of shareholders, certainly not. If Mr. Joly’s strategy works, we’ll see some very interesting corporate bodies with new roles in the world. And maybe, just maybe, that’s why you’re listening in: because you’re interested in looking at the future, through very old-fashioned, outdated eyes.
[Note: The following editorial is entirely qualified by qualifications about Mr. Joly.]