October 11, 2019
Sen. Elizabeth Warren (D-MA) sent a letter to JPMorgan Chase Chairman and CEO Jamie Dimon, Chairman of the Business Roundtable, addressing the Roundtable’s "Statement on the Purpose of a Corporation," highlighting it as a potentially significant change in U.S. corporate culture and demanding “tangible action.”
The letter requests that Mr. Dimon publicly disclose what tangible actions he will take on behalf of JPMorgan Chase to implement the principles outlined in the statement and notes Sen. Warren’s expectation that the Business Roundtable (BRT) should support her Accountable Capitalism Act (S. 3348). The letter states that in the early 1980s, less than half of corporate profits at the largest companies went to shareholders; however, by 2015, that portion had risen to more than 90%.
The four major requirements of the Accountable Capitalism Act include:
Sen. Warren requests “concrete steps,” in writing, on how Mr. Dimon and the other signatories will achieve the following commitments made in their Statement:
Why it matters: While the BRT statement generated significant press, it is not clear how the statement works in practice. Will boards make a case to shareholders that they need to accept lower returns in order to meet the needs of another stakeholder? How will results be quantified and reported? Will compensation be tied to any new metrics? What role should legislation and regulation play in establishing a holistic stakeholder corporate governance model, if any? Or, are many of these concerns already incorporated in a long-term shareholder return corporate focus? Companies will need to consider these questions moving forward.