29. Marcus Peacock on the impact of the Business Roundtable

Marcus Peacock is the Chief Operating Officer of the Business Roundtable, an association of Chief Executive Officers of America's leading companies.  In this episode we discuss the Business Roundtable, its highly publicized Statement of Corporate Purpose (August 2019) and what it's like to administer the BRT board of directors, composed of more than 20 CEOs of large US companies. Thanks for listening! We love our listeners! Drop us a line or give us guest suggestions here. Links Marcus Peacock bio Link to Statement pf Corporate Purpose Link to BRT website Quotes The purpose of the Business Roundtable is to promote policies that will result in a growing and thriving economy for everybody in the United States. We ar            e made up of the CEOs of large US companies. So, if you think of a large US company, their CEO is probably a member. The CEOs are the members – not their companies - and we help them develop and formulate policies that we think will meet the mission of the organization, and then we help them advocate those policies at the federal level - with the administration or on Capitol Hill. The BRT is an issues organization, not a partisan one.  We don't give campaign money. We don't have a PAC, but there are issues that our members care a lot about that, we think, if our policies are adopted, it'll help the economy grow and people find jobs and help out the general welfare. Big Ideas/Thoughts The BRT Statement of Corporate Purpose (8.8.19) See full text below and here. Just so people know, it states that a company, and particularly the CEO of the company, has a commitment not only to the shareholders of that company, but to the customers, the employees, the suppliers, and the communities in which that company works. Of course, there's more detail in the statement. In 2018, some of our members were receiving criticism from both the left and the right of the political spectrum based on a stereotype of businesses where it's all about maximizing short-term value, even if that hurt suppliers or communities or employees, and they felt "that's not the way we do business" and "we need to do something more than just push back when we see these people making these assertions." The statement sets a standard that is very much about long-term value, and I think some of the criticism we received may miss that point. You're not going to have, in the long-term, a thriving organization that doesn't treat its customers, employers, suppliers, and communities well.  All those things are necessary.   Criticism of the Statement from the Wall Street Journal JA: I wanted to ask about criticism that you've got from the Wall Street Journal and the pushback that you've received. MP: They were saying, "No, this is about your shareholders. They are the people who are taking the risk. They're putting the investment in. This isn't about these other stakeholders who may have completely different objective functions." And our response to the Wall Street Journal is "well, so you're against the long-term.  You make commitments to these other stakeholders because you're trying to build this long-term value. If you're not interested in long-term value, then, yeah, go ahead and screw your suppliers, you get out of them what you can today, but pretty much from now on, they may be broken down and gone. That's a good way to get short-term value, it's not a good way to build up a company for the long term." Momentum Behind Change in Corporate Perspective JA: I believe some of the momentum is driven because institutional investors who look at the failure to focus on the long term as a risk, and as long as there's that risk, that creates a problem for the company. MP: It does mean that, particularly for a signatory, people should be able to go to them and go, "How are you implementing [this]? How are you living up to the words that you signed on to?" And the fact is, they are. Impact of Statement on BRT Some CEOs who had not been members in the past have now come to us since the statement was put out and said, "We would like to join BRT." In some cases, I know the statement made a difference. And some of the increased interest in BRT comes directly from actions our members took during the pandemic and also in the wake of George Floyd's murder. Our members have taken actions which people see demonstrate that they're living by the words that they'd signed on to.   Managing a Board of 20 Top CEOs JA: I'd like to talk about your role as COO - one of  your jobs is to manage the BRT board. Managing a board is always a challenging job but managing a board of 20-plus CEOs of the biggest companies in the US must be, let's say, particularly interesting. Tell us what that's like.   MP: Well, I've learned more from them than they learned from me. But for me, because they know what they're doing, in some ways it's somewhat easy, although their expectations are high. The biggest job for me is to make sure that every minute of their time related to the board of directors is something that is of value to them - - including allowing them time to talk to each other, in a social way, which is something they do value because they don't often get to hang out with each other Also, to make sure they're not dealing with anything that's too trivial, and that they're given the information that they need so they can have an informed discussion and come to a decision that's going to be right for them.   JA: Well, I think that's the perfect confluence of all the things that you want for great governance: a group of people who are really good at what they do, who have high expectations, who want to use their time well, and from what you're telling us, willing to work hard at the job. They're not just showing up and show me a PowerPoint, they're really digging in and asking tough questions. Every board, that's the challenge. You have high expectations for the board, but that means that whoever's organizing it - the chair, senior management, whoever, really needs to give a lot of thought to how are we going to take best advantage of this very valuable time of our board members.    Girl Scouts National Board of Directors I have two daughters, they were girl scouts. My wife was their troop leader. My wife was a gold award girl scout. Her mother was there, too. I was a volunteer. It's just a great organization. They have a great mission. Their mission is to build girls of courage, confidence, and character to make the world a better place. I mean, how can you beat that? I feel privileged to be on that board. I think that they have done a tremendous job. I'm forgetting the exact number, but I did read that a very large percentage of the women fortune 1000 CEOs were girl scouts at one point in their lives and in fact, a significant number of the members of Congress and senators who are women were girl scouts.