Yesterday marks the day when American capitalism took a crack at being “woke” when the Business Roundtable redefined the role of the American corporation in the “new” America we live in today.

In the past (1997), the Business Roundtable thought “…the paramount duty of management and boards is to the corporation’s shareholders…”

Makes sense, no? The shareholders own the company, right? Not so fast, amigo. Not so damn fast.

If you are a student of such things, you will enjoy reading the view of the world from 1997. It is here:

Business Roundtable Statement on Corporate Governance

It is worth noting that the “shareholders” are not a social club; they own the companies of which these CEOs are the leaders and managers.

The food chain looks like this:

 1. Shareholders — the owners — of companies elect the Board of Directors.

 2. The Board of Directors engages the management of the company — the Chief Executive Officer being the primary hire of the Board.

 3. The Chief Executive Officer assembles the balance of the management of the company subject to the concurrence of the Board.

 4. The CEO and the management run the company subject to Board oversight.

This is a legal construct as well as a practical structure.

In this instance, the Business Roundtable is populated by CEOs. The CEOs of the Business Roundtable did not ask permission of their boards or their owners to rediscover the purpose of corporations. They acted on their own.

The initiative was introduced by Jamie Dimon, Chairman of the Business Roundtable and Chairman and CEO of JPMorgan Chase & Co.

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