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WASHINGTON DC: August 19, 2019. U.S. business leaders have decided maximizing shareholder value, to the potential detriment of all else, is no longer the core objective of American companies.

A new statement of purpose published by the US Business Roundtable and signed by 181 CEOs says corporations should exist for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.

According to analysis of federal data by America’s largest labour federation, the AFL-CIO, last year the country’s CEOs earned an average US$14.5 million compared to an average US$39,888 for rank-and-file workers.

Now the CEOs want to “promote an economy that serves all Americans”, rather than just a few, by declaring a commitment to: “Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

Southwest Airlines pilots“Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

“Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

“Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

“Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.”

It didn’t take 50 years for Herb Kelleher, the legendary co-founder, CEO and executive chairman of Southwest Airlines who passed away earlier this year, to come to a similar conclusion. When Southwest took to the air in 1971, he famously declared happy employees come first because they make happy returning customers and subsequently happy shareholders.

This month Southwest declared its 172nd consecutive quarterly dividend after a second quarter record net profit of US$741 million by putting employees not shareholders first. Be interesting to see how many employees turn up at any of the memorial services of the signatories to this latest corporate governance iteration from the Business Roundtable.

For Southwest current and former staff, the convention centre in Dallas wasn’t big enough – it could only hold 5,000 of them.

Pictured: Southwest has launched a career programme called ‘Destination 225°’ to become a qualified candidate for future Southwest First Officer positions.

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