Traders work on the floor of the New York Stock Exchange (NYSE) on August 23, 2019 in New York City. Eduardo Munoz Alvarez/Getty Images/AFP
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The Business Roundtable, an association of the most powerful chief executive officers in America, announced this month that the era of shareholder primacy is over.As a matter of corporate law, CEOs are appointed by a company's directors, who in turn are elected by that company's shareholders every year.It continues to try to weaken shareholders' ability to propose agenda items for shareholder meetings.In short, for the Business Roundtable and the CEOs it represents, shareholder primacy has never meant shareholder democracy. Instead, the shareholder-value model has given CEOs cover to avoid discussing corporate strategy, especially when it comes to considering alternatives to the share price as a metric for corporate performance. It is quite a different matter when shareholders have assembled into blocs with effective veto power and the ability to coordinate in pursuit of common goals.For CEOs, the emergence of powerful shareholder blocs has changed the corporate-governance game. Confronted with the headwinds they themselves generated, American CEOs seem to have concluded that best defense is a good offense. But if they are serious about abandoning the shareholder-primacy model, public statements will not suffice.
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