Well, that didn't take long. Last week this column warned about the consequences after CEOs of many of America's largest public corporations vaguely agreed to serve "stakeholders" who may not actually own any stakes in the companies. Now at least one member of the Business Roundtable is being called upon to put money behind its new commitment to "deliver value" to people other than shareholders.
AT&T CEO Randall Stephenson was among the more than 180 signatories of the Roundtable's new " Statement on the Purpose of a Corporation ." Mr. Stephenson and the other corporate leaders committed, among other things, to "investing in our employees. This starts with compensating them fairly and providing important benefits."
AT&T can make a case that it already pays its employees well and in today's tight labor market, the discipline of the market is forcing all companies to raise wages or watch talent head out the door. But Mr. Stephenson might not have expected to be challenged immediately on his vague commitment to serve employees.
Michael Kanell reported Sunday in the Atlanta Journal-Constitution:
In a surprise move, more than 20,000 union workers for AT&T in the Southeast went out on strike as of midnight Friday, officials said.
Members of the Communication Workers of America — including 4,000 in Georgia — charged the huge telecommunications company with unfair labor practices during negotiations aimed at securing a new contract. The previous agreement expired Aug. 3. Since then, the talks have gone nowhere because the company has made sure that an agreement cannot happen said Richard Honeycutt, the union's vice president for the Southeast in a statement issued late Friday. "Our talks have stalled because it has become clear that AT&T has not sent negotiators who have the power to make decisions so we can move forward toward a new contract."
...Company officials said they were blindsided and mystified by the strike call. "We're baffled as to why union leadership would call one when we're offering terms that would help our employees — some of whom average from $121,000 to $134,000 in total compensation — be even better off," said AT&T spokesman Jim Kimberly.
AT&T has to be careful managing costs as it continues to whittle away at its large debt load while competing in a video entertainment market that is now crowded with deep-pocketed rivals in media and tech.
Now along comes an email from Isabel Urbano of the BerlinRosen public relations firm, which is representing the Communications Workers of America union. Ms. Urbano writes:
AT&T CEO Randall Stephenson signed on to the Business Roundtable statement reaffirming principles of corporate responsibility last week -- and then 20,000 AT&T workers walked off the job. Was that all talk?
Shareholders at AT&T and other companies may be concerned that last week's statement will indeed turn out to be more than talk. And the result may not be positive even for the "stakeholders" the Business Roundtable wants to help if corporate managements lose their focus on serving shareholders and build less competitive companies.
Last week the Council of Institutional Investors explained the threat to the vitality of the American economy:
The [Business Roundtable] statement suggests corporate obligations to a variety of stakeholders, placing shareholders last, and referencing shareholders simply as providers of capital rather than as owners.
CII believes boards and managers need to sustain a focus on long-term shareholder value. To achieve long-term shareholder value, it is critical to respect stakeholders, but also to have clear accountability to company owners.
Accountability to everyone means accountability to no one... Americans depend on strong companies not only as employees and communities, but also as owners, including through pension funds and other retirement holdings. CII supports putting capital to its best use for long-term performance, which includes addressing stakeholder contributions to that objective. It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value...
While it is important for boards and management to have and articulate long-term vision, and sustain focus on the long-term strategy where they have strong conviction, a fundamental strength of the U.S. economy has been and continues to be efficient allocation of equity capital. If "stakeholder governance" and "sustainability" become hiding places for poor management, or for stalling needed change, the economy more generally will lose out.
For those who want America's outstanding job market to continue, start with healthy companies.