Telstra’s Shareholder Value

Hmmm, Telstra has decided not to proceed with its FTTN rollout.
Interesting use of the Shareholder Value concept. SpiralPath understands that Shareholder Value is supposed to be a solution to the agency question. That is the “principal” (ie owner) wants to do something (ie run a business). The principal doesn’t have all the resources to do this so they employ an agent (manager).
Managers, as we all know, are lazy and want to be paid as much as possible for doing as little as possible. So the principal has to add incentives to make the manager work harder and, in particular, to do what the principal wants the manager to do.
Lovely theory. All the problems of agency solved – except the costs. So we bring in shareholder value. We simplify the whole thing. We pay executives huge salaries with added stock bonuses if they can do one thing – increase the share price. Even the most dumb witted managers should be able to understand this.
Except in cases like Telstra. The managers become so engaged in the task of increasing shareholder value they forget that shareholder value is simply a measure of how well they are serving the interests of shareholders. So single mindedly focussed in fact that they will refuse to do what shareholders (in this case, the Australian Government) want because it will reduce the share price.
Twisted logic indeed.

Maslow’s Hierarchy

Why do we organise?
I’ve been thinking about this question lately.
A more fundamental questions is why do we work?
A lot of people would laugh at this question with the simple response “we work to earn money.”
I was discussing this with a client recently after we had both had a short break. We spoke about how we enjoyed the break immensely but it was becoming a fast receding memory for both of us. My client then said to me

That’s why we work. We work to earn enough money to take a holiday.”

Hmmm. I’m not so sure. I like my work. I’ll go even further. I love my work and I’m passionate about it. I get tired quite often and I enjoy getting home each night and putting my feet up. I enjoy the weekend and it’s hard to start again on Monday morning. There are parts of my work I would rather not do – it would be very nice if the administration just did itself. But the real work, the part where I am working with a client – that’s what I live for. Well I live for other things as well, but the essence of my work is wonderful.
But maybe I’m one out.
Here’s another take:

Work hard and the world respects you. Work hard and you can have anything you want. Work really extra super hard and do nothing else but work and ignore your family and spend 14 hours a day at the office and make 300 grand a year that you never have time to spend, sublimate your soul to the corporate machine and enjoy a profound drinking problem and sporadic impotence and a nice 8BR mini-mansion you never spend any time in, and you and your shiny BMW 740i will get into heaven. [from Mark Morford’s column at SFGate.com.]

That certainly is a common perspective.
But deep down, I am convinced that something else is driving us. Today, I started thinking about it in terms of Maslow’s Hierarchy.
Sure we work to feed, clothe and house ourselves. Most of us in the West have got that covered (although I am not for one moment forgetting that there are many in the West who struggle to meet even these basic requirements.)
As I re-read Maslow, I am warming to the parallel with why we work. Going one step up his scale is Safety. Yes we work to make ourselves safe. Partly this relates to our personal lives – to save enough to keep ourselves fed, clothed and housed throughout our lives. But also at a communal level – we work to provide the infrastructure we need to be safe.
The next level is love and belonging. Again, work enables most of us to have and to provide for a family. We also work to belong to something. To be part of something.
Coming along to the BMW 740i we have self-esteem and status. This is where it really starts to get interesting. Why is status so important to us? Because we are all so uncertain of ourselves? Because deep down, we all have a need to prove ourselves to ourselves? Hmm? I think somehow, I’ll be coming back to this theme. But I don’t want to dwell on it here because Maslow’s next two levels are really fascinating – Self-actualisation and Transcendence.
Put aside for the moment arguments about whether Self-actualisation is an end itself or simply a means to Transcendence – just ask yourself the question “What would it be like to reach transcendence in work?”
Comment it you like. Of just come back to follow the discussion.

Agency Theory and Shareholder Value

At the complete opposite end of the spectrum from the warm and fuzzy Stakeholder
Theory and Corporate Social Responsibility are the cold hard Agency Theory
and ‘Shareholder
Value’ approaches

Agency Theory

Agency theory first arose in the 1970s and was apparently developed by Ross (1973), Mitnick
(1973) [10] and
Jensen & Meckling (1976,
as cited in Eisenhardt
1989
) [11].
Eisenhardt describes it:

"Specifically, agency theory is directed at the ubiquitous relationship,
in which one party (the principal) delegates work to another (the agent), who
performs that work. Agency theory attempts to describe this relationship using
the metaphor of a contract." (Eisenhardt, 1989:58).

Agency theory talks about two agency problems. 1) There is likely to
be a conflict between the interests and goals of managers and principals and
2) managers and principals will have different levels of risk aversion. The
costs of agency are said to be the cost to principals of 1) obtaining information
about what managers are actually doing and 2) enticing managers to act in the
interests of the principal.

Agency theory is both based on self interest (the agent will act in their
own interests and against those of the principal) and relies on self interest
in part to resolve this problem (different levels of incentive based on the
self interest of the agent are required to motivate the agent to act according
to the principal’s wishes).

This emphasis on self-interest causes concern for many of the theory’s detractors.
According to Eisenhardt (1989), "Perrow (1986) also criticized the theory
for being unrealistically one-sided because of its neglect of potential exploitation
of workers." and Mintzberg et al argue that the promulgation of this theory
through business schools as contributing to a wider social phenomenon of selfishness: 

The fabrication of economic man drives a wedge of distrust into society
between our individual wants and our social needs. (Mintzberg et al, 2002). [12]

Shareholder Value

If you’ve read anything in the business press over the last 20 years, you
would know that every board and senior executive has but one goal and responsibility
– to increase ‘Shareholder Value.’ Regarding this concept, Sally Eastoe
observes:

The term ‘shareholder value’ was first introduced in
the 1980s by US consultants who were selling value-based management to companies
already under stock-market pressure to increase returns. (Eastoe, 2005: 33) [13]

If you really want to undestand where this idea came from, you need to look
at Lazonick
and O’Sullivan
(I’ll mostly refer to them as L&O from now on)
trace the phenomenon back to the 1980s when “a relatively small number
of giant corporations … dominated
the economy of the United States”
(Lazonick & O’Sullivan,
2000: 14
). Accumulating huge revenues these
corporations allocated them according to a principle L&O call “retain
and reinvest”. The corporations tended to “retain both the money
that they earned and the people whom they employed.” (Ibid.) According
to L&O this enabled them to build a strong foundation for growth. However,
they argue, this principle began to run into problems because of the sheer
size of the organisations they had built and competition — mainly from
Japan at that time. Noting the rise of agency theory at this time and the

relatively poor performance of companies in the 1970s, agency theorists
argued that there was a need for a takeover market…. The rate of return
on corporate stock was their measure of superior performance, and the maximization
of shareholder value became their creed. (Ibid: 16)

In parallel with the agency theorists during the 1970s “the institutional
investor” (look up Jonk
Bonds
) also became prominent at this time, resulting in the “transfer
of stockholding from individual households to institutions such as mutual funds,
pension funds and life insurance companies. (Ibid.) [14] L&O
trace how these developments, including the development of the junk bond market
which facilitated launching hostile takeovers, led to a new paradigm — “downsize
and distribute”

Finally, L&O argue that while it appears that a focus on shareholder value
has paid off (at least for US shareholders)

We must consider the possibility that the US stock-market boom is
encouraging US households to live off the past while corporations have less
incentive to invest for the future. (Ibid. 32)

and

Yet the stock-market boom has not made capital available to industry.
The persistent and massive flow of funds into stock-based mutual funds in the
1990s has bid up stock prices, increasing the market capitalizations of corporations.
But, as we have seen, net corporate equity issues have been negative over the
course of the 1990s because of corporate stock repurchases, while the main
impact of the stock-market boom on capital markets has been to raise consumption.
(Ibid.)

This suggests that the focus on shareholder value has not achieved the results
suggested by its proponents at the macro level. In a future post, I am going
to discuss Sally Eastoe’s
Swinburne DBA thesis. Sally makes a strong argument that it does not
produce results at the individual corporation level either.

I argue that something else is needed, and has always been needed, to develop
commercial enterprise that is truly wealth creating over the long term. I suggest
that what we need is an enduring purpose.

Origins of CSR and Stakeholder Theory

Origins and development of Corporate Social Responsibility and Stakeholder
Theory

I’ve wondered for a long time how the belief in Shareholder Value
came to dominate corporate thinking. I started reading around this topic to
try to understand how this came to be. Clearly it is related to what each of
us see as the purpose of corporations.

In a previous post, I wrote about Art Kleiner’s ‘Age of corporate
dominance’. We’ve been arguing about the purpose of corporations
ever since.. Do they exist solely to make a profit and serve their shareholder
owners or do they have a social responsibility to other stakeholders as well?

In 1979, A.B.Carroll wrote:

The modern era of social responsibility, however, may be marked by
Howard R. Bowen’s 1953 publication of Social Responsibility of the
Businessman
, considered by many to be the first definitive book on the subject
É By the mid-1950s, discussions of the social responsibilities of businesses
had become so widespread that Peter Drucker chided businessmen: “You might
wonder, if you were a consciencious newspaper reader, when the managers of American
business had any time for business” (p 497)

Stakeholder Theory came into being a decade later. Freeman
& Reed
suggest the term ‘stakeholder’ was “coined
in an internal memorandum at the Stanford Research Institute in 1963”
while they trace discussions of the social responsibilities of the modern corporation
back to Berle
and Means
in 1932 who “were worried about the ‘degree of prominence
entitling (the corporation) to be dealt with as a major social institution.’”
and

Chester Barnard [who] argued that the purpose of the corporation was
to serve society, and that the function of the executive was to instil this
sense of moral purpose in the corporation’s employees. (Ibid.)

They note that Igor
Ansoff
included a discussion of the new [stakeholder theory] concept in
his 1965 book, commented that systems theorists “led by Russell Ackoff
‘rediscovered’ stakeholder analysis” in the mid-1970s and
in 1975 Dill
“sought to move the stakeholder concept form the periphery of corporate
planning to a central place.” (Freeman & Reed, again)

By the mid 1970s the term “corporate social responsibility” had
come into common use (eg Sethi
in 1975) and was used to cover the same ground as stakeholder theory. Also by
this time, issues of definition and the terms meaning different things to different
people had come into play:

The phrase corporate social responsibility has been used in so many
different contexts that it has lost all meaning. Devoid of an internal structure
and content, it has come to mean all things to all people. Business executives,
academic scholars, government regulators, and social activists view the corporation’s
social role within their respective frames of reference, thereby allowing the
evaluator maximum discretion as to the amount of funds expended, the nature
of the activities engaged in, and the types of groups whose needs are responded
to. (Sethi)

Indeed Sethi represents an early attempt to resolve this divergence of views
by introducing the concept Corporate Social Performance. Carroll
takes this further by developing a three-dimensional model in which Corporate
Social Performance (CSP) is based on both Corporate Social Responsibility (CSR1)
and Corporate Social Responsiveness (CSR2)

Throughout this phase, an important distinction began to develop. As Mitchell
et al
note

In 1978 William C. Frederick observed that business and society scholarship
was in transition from a moral focus on social responsibility (CSR1)
to an amoral focus on social responsiveness (CSR2). When stakeholder
theory focuses only on issues of legitimacy, it acquires the fuzzy moral flavor
of CSR1. Focusing only on stakeholder power, however, as several
major organizational theories would lead us to do, yields the amorality and
self-interested action focus of CSR2. Instead we propose a merger.

That is, some scholars and practitioners began promoting the view that business
had to take stakeholders into account, not for any moral responsibility they
had to these stakeholders, but rather because they had to manage the risk to
the firm due to the influence activist group now had the power to exercise.
Social performance was seen as a way of demonstrating the company’s responsiveness
to social trends.

It was in this context that Freeman & Reed made an attempt to resolve these
dilemmas in part by focusing on the political nature of stakeholder power and
its implications for corporate governance:

We have hesitated to suggest particular strategies for directors that
find themselves in one of the conflict situations we have explored. Our goal
has been, rather, to counterbalance the great weight of attention expended on
changing the (perceived) status quo and mandating certain types of board structure
of behavior with attention placed on a realistic appraisal of the current situation
and a sensitive elaboration of the potential lines of action currently available.

In other words, there is no simple formula that managers or directors can apply
to determining what they need to do. Rather they have to exercise their judgment
in each situation and on each issue.

As noted above, Mitchell et al (1997) made an important contribution
in this phase as well. In Corporate Social Responsibility (and its derivatives
— CSR2 and CSP) the question had been around whether to take
a wide or narrow view of a corporation’s responsibilities (ie did they
extend beyond economic and legal?) while in stakeholder theory there was a similar
dilemma regarding the definition of ‘stakeholder’. The business
rationalists defined stakeholder narrowly as ‘stockholder’ while
other views include

The Narrow Sense of Stakeholder: Any identifiable group or
individual on which the organization is dependent for its continued survival.
(Freeman
& Reed
,)

and

The Wide Sense of Stakeholder Any identifiable group or individual
who can affect the achievement of an organization’s objectives or whi
is affected by the achievement of an organization’s objectives. (Freeman
& Reed
)

Mitchell et al’s contribution was twofold. First they attempted
to answer the questions “Who is a stakeholder and what is at stake?”
(Mitchell et al, 1997) by identifying stakeholders and their influence
along the dimensions of Power; Legitimacy, Urgency and Salience.  Secondly
they make the important call for

empirical research that answers these questions: Are present descriptions
of stakeholder attributes adequate? Do the inferences we make herein hold when
examining real stakeholder-manager relationships? Are there models off interrelationships
among the variables identified (and possible others) that reveal more subtle,
but perhaps more basic, systematics? (Ibid.)

Unfortunately, it appears their call for empirical research in this area has
largely gone unheeded.

Clarkson
claims to present results from a 10 year research program but rather presents
conclusions without data and, at best, sketchy details of his methodology.

Jones
(1995) cites studies by Alexander
and Buchman
(1978), Cochran
& Wood
(1984) and Sturdivant
& Ginter
(1977) but concludes “none has been based on a credible
theory.”

In my next post in this series, I will look at the origins of Agency Theory
and Shareholder Value.

A brief history of the corporation

I’ve been thinking a lot lately about how corporations came to be and
how they came to be so powerful. There is nothing wrong in my mind with
powerful corporations. More important is how they exercise their power
and what moral, ethical and legal power we have to place constraints
on their exercise of power.

It put me in mind of something I read some time ago written by Art
Kleiner – The Age of Heretics

Kleiner, summarizing John P Davis’ book Corporations (Capricorn
Books1961), traces the history of the modern corporation back to “the
monasteries of the early Christian Church’. Commercialisation
came when the mercantile stock companies began organizing expeditions
to far parts of the globe across dangerous waters:

If a ship failed to return, the owner would qualify for debtor’s
prison; if an owner died before a ship returned, his creditors might
not be paid. Thus European kings and queens chartered corporations —
creatures of legal sovereignty, named after the Latin word for “body.”
The stock company had no human body, but it was corporeal in every other
sense. It could own property, outlive its human members, and borrow
or lend money. The monarchs had designed these new institutions to carry
out the policies that they found too risky to undertake themselves.

Kleiner goes on to recount a major turning point in corporate
history when, in 1811, the New York legislature

established a blanket corporate charter. Anyone who met the
legal criteria was automatically granted the powers of a company.

This led to a flurry of legislation as the states of America
at one and the same time competed to attract entrepreneurs but also limit
those same entrepreneurs’ abuse of privileges the legislatures had granted
them. Finally, Kleiner concludes:

By 1945, … the commercial corporation had come to dominate
the culture of the world.

I have posted this brief history because over the next few days I want
to discuss the purpose of corporations. Corporations were, and still
are, created by an act of the state. Individuals are given protection
and privileges under law to act as a company. In return the state can
expect those same companies to meet certain obligations and responsibilities.
There’s plenty of room to discuss what those obligations and responsibilities
might be, but that they exist and corporations have both a legal and
moral duty to meet them is beyond dispute.

The Bright Yellow Rope

When my children were young I used to read them a story written in verse about
a bright yellow rope. It describes a young boy, Sylvester, who finds a yellow rope
on the road and immediately comes across someone who’s wagon has fallen in a ditch.
The boy then introduces the chorus:

Hi there, friend, you sure have trouble.
I’ll help you, as quick as a bubble.
Take my rope.
Yes, you can keep it.
Pass it on when others need it.
(The Bright Yellow Rope, John Houston,
1973).

The story goes on to describe how each person in turn helps another with the rope,
giving it to them with the same chorus. In the end, Sylvester himself finds himself
in trouble and, sure enough, the current owner of the rope helps him out and gives
the rope back to him.

I liked reading this story to my children. It’s a fun story and they liked hearing
it. But I also liked reading it because it was another way of instilling in them
a value I hold dearly – you get more out of life by giving to others than
you do by trying to keep everything to yourself.

I know many of my friends, colleagues and acquaintances feel strongly along similar
lines. Many of the people I know who hold senior positions in large corporations
or sit on the boards of those corporations live out similar values in their personal
lives.

However, we seem to live in a world where it has become almost illegal to bring
a spirit of generosity into the management or direction of our public corporations
because doing so would violate what has become the most sacrosanct value in business
today – ‘corporations exist to increase shareholder value’. Donations to
charity can only be given if the directors or managers can show a direct likely
return to the company, and through it, the shareholders. Loyalty to employees
is a cost to shareholders and can’t be tolerated. Employees are kept in the company
only as long as no cheaper alternative is available. Finally, profit reigns supreme.
If a company knows a way to increase profit, it has a responsibility to its shareholders
to do so without regard to any social consequences that may follow.

I fear for a society in which our largest and most powerful institutions are based
on such principles.

Corporations are citizens just as much as you and me . We compete for resources,
our actions impact on each other and we both leave a material legacy for the generations
that will follow us on this planet.

However, as individuals we learn social norms from an early age. In addition to
helping those in need, we are taught to tidy up after ourselves, not to take more
than our fair share, to let the other person go first, to treat others with respect
and dignity and to stand for justice in the world.

The principle of shareholder value, as it is often represented, appears to me
to be an attempt to exempt one class of citizens – namely corporate citizens
– from these norms and values. Values without which social organisation
would not be possible. I would go further and argue that shareholder value at
its core is a veil behind which individuals seek to exempt themselves from the
norms that society imposes on them and thus gain advantage over their peers. At
its worst, as we saw at Enron, this is just an adult version of
the child who takes the whole cake for themselves at a birthday party and cares
nothing for the others who are left with none.

The mythical CEO hero lives on

I was roused by a couple of articles that came across my desk this week to think
again about the prevailing myth of heroic corporate leadership – particularly heroic CEOs.

First was the following headline in the Australian Financial Review on Wednesday:

Dragon fires up another record. After lifting St George Bank’s interim net profit to a new high,
CEO Gail Kelly said she was confident the NSW economy would bounce back.

Second was the cover story in this week’s BRW:

Kick-Starting WESFARMERS: What CEO Richard Goyder must do.

You have to wonder why these CEOs need to have employees. They never seem to
do anything. It’s just the CEO. the board sits on its hands and the rest of
the senior executive team just turn up once a month to collect their pay and
have their car serviced.

You have to wonder how this situation came to be. Without doubt there have
been great acts of leadership throughout the ages but in times past these have
been regarded for what they are. Courageous acts of leadership that have inspired
and given heart to the followers with the result being a resounding victory.
Winston Churchill comes to mind. Few would say that Churchill won the war or
event that Churchill won the Battle of Britain. He would be regarded as remaining
true to his purpose in the face of huge adversity and leading his people to
resist the enemy.

Why then do we regard much lesser acts by the leaders of modern corporations
as so heroic and why to we attribute success and responsibility solely to the
CEO? I am in the process of exploring this phenomenon. Here’s what I have come
up with so far.

Henry Mintzberg, in his article
Beyond Selfishness
[payment required] argues that shareholders

have co-opted the chief executives by rewarding them disproportionately for
the performance of the entire enterprise. Through options and bonuses, they
have bought off tbe cbiefs. According to a recent survey, “Executive Excess
2001,” conducted during tbe 1990s hy tbe Institute of Policy Studies, CEO
pay rose by 570%, while profits rose by 114%, and average worker pay rose
by 37%. barely abead of inflation (wbicb was 32% over this period). Had workers’
pay kept pace, they “would have averaged $120,491 instead of $24,668″ by tbe
end of the decade.'” In 1999, wbile median sbarebolder returns fell by 3.9%,
CEO direct compensation rose another 10.8%.”

Lee Drutman in Runaway
CEO Pay and the Myth of “Shareholder Democracy”
argues almost the opposite:

I ask, because at almost all U.S. companies, shareholders have about zero say into who sits
on the board of directors and how executive pay is set. The directors are typically nominated by
management, and shareholders are given one and only one slate of directors to choose from—a Soviet-style
election that virtually guarantees managers will get their trusted friends on the board of directors.
So it’s no surprise that executive pay packages continue to defy common sense.
After all, what’s a few million among friends?

I lean towards Drutman’s view. I would go as far as to say that the whole process
is a conspiracy of the CEO club. It suits those who are and those who aspire
to be CEOs for people to believe that the fate of their corporation rests solely
in the CEO’s hands. I’m not so sure that boards reward CEOs so highly because
they are so chummy with them, rather it is because CEOs have held their boards
over a barrell with the threat of walking if they are not sufficiently rewarded.
The board, fearing retribution from the market for appearing not to be able
to manage their key appointments, caves in.

Shareholders are not blameless in the process either. Mintzberg is right when
he says it is related to greed. Shareholders have abbrograted their control
to "the market" – ie that mass of twenty something year old traders
who play the game purely for the thrill of the win. (See Liar’s
Poker
by Michael Lewis for a humourous and insightful account of life as a trader.)

Changing seasons and getting older

It’s Easter.
In Melbourne Easter traditionally marks the final end of summer regardless of what the weather is like. Sometimes we will get a warm Easter and sometimes it will be quite wintery. This Easter has been more wintery than warm. I started out with a long sleeved shirt on Good Friday but by early afternoon I had changed into shorts and a t-shirt. Then came the change. The temperature dropped many degrees and we had a heavy rain storm. Hard to imagine two more different weather conditions in one day.
Three weeks ago, we were walking along the banks of the Yarra River just before 8pm waiting for the Closing Ceremony of the Commonwealth Games to begin. We were wearing t-shirts and shorts and it was quite warm – almost hot for that time of day. A few days later the maximum temperature was about 13 and we all had overcoats on.
Winter came quickly this years. I love winter, but I hate its coming. Summer represents holidays and slowing down a bit. Everyone is a bit more relaxed about deadlines. I relax more. I love going to the beach. I love swimming and I love the spectacle of it with other people swimming, sunbaking, surfing, playing on the beach and yachting.
I’m always a bit sad when summer ends. It means all that is put away for another year and while business gets busy again, the world around slows down a little. In a way it marks the end of another year. I guess you could say the end of any season marks the end of a year, but for me as winter ends, there is the excitement of summer around the corner and summer holidays.
Winter seems more a time of solitude. After winter has set in I love it. I love sitting by an open fire when it is cold and pouring with rain outside. I love going for a brisk walk in the cold air. It’s nice that those oppressive hot nights have gone again for a while.
When winter comes, I’m never ready for the change from out summer sport – Cricket to our winter sport – Aussie Rules Football. As the football season progresses, I get really involved in it and often listen to or watch the my team’s games. I even watch other games just because they’re on. But at the start of the season, it takes me a while to get into it.
But underneath it all, I think for me, the coming of winter marks the marching of time. It means I am getting older. Also as I run my own business, it means I have to get serious about all those goals I set at the start of the year. It always takes time for things to happen but by the time winter comes, it’s a real test of whether they will or not. So I am getting older and have to question whether I am moving towards my life goals.
So by mid winter I am loving it. At the change of seasons, I have a lot to think about.

Betrayal is sometimes a good thing

In this Human Relations piece [subscription required] ISPSO associate James Krantz argues that

“betrayal is an essential element of leadership and organizational change.”

He suggests that during significant change “decisions that breach existing social, psychological and intrapsychic configurations” have dynamic reverbations and these “transgressions are often experienced as betrayal.”
This is an aspect of courageous leadership that I hadn’t really thought about as such before.

A different type of stakeholder

Although I haven’t followed his career closely Don
Argus
has always struck me as a deep and broad minded thinker. There
are other powerful CEOs and chairmen that don’t evoke the same confidence
in their ability to think beyond profit and power. A certain telecommunications
carrier comes to mind in that respect.

Don Argus came to my attention again this morning in this
article
[Subscription Required] in the Fin
Review
today. In this edited extract of a speech he gave yesterday
to the Australian Institute
of Company Directors
Argus argues that the narrow focus on shareholder
interest is misplaced. Certainly shareholders provide the financial capital
for the company to operate, but many (most?) have no long term commitment
to the company. However:

…should shareholders hold sway over strategy and operational implementation
which may force management to drastically change the fortunes of a particular
company. These same shareholders could be gone in the blink of an eye by
selling their shares the next day or even the next minute.

Others with no skin in the game (at least financially speaking) may demonstrate
much longer term commitment and interest (although as Argus points out in
the case of French activist José
Bové
that interest may be negative). Employees come to my
mind as a group that provide a certain type of capital without which the long
term growth of the company would be impossible. To expect that we can gain
the commitment we require from this group in return for salary and conditions
is, in my mind, naive.

Regardless, Argus goes on to argue that boards need to take into account,
and balance, the interests of a broad group of stakeholders. A fine balancing
act not doubt, but one that reflects the realities of modern corporate life
— telco CEO take note.